1. Chapter 2 The Optimal Supplier

2. The Initial Supplier Survey First, list all possible suppliers Next, trim the list by establishing a set of criteria – Product Lists – AP prices – Supplier services – Location – Lead times – Purchasing policies

3. The Fixed Bid Vs. The Daily Bid Fixed bid – Used for large quantities of products purchased over a long period of time – Typically a formal procedure – Request for bid includes specs for bidding process Daily bid – Used for fresh items – Called “daily quote buying”

4. Selecting a Supplier When Using Bid-buying Fixed Bid – Distribute bid requests to potential suppliers – Determine what supplier provides you with the optimal value for a product or a set of products Daily bid – Review bid sheets – Determine what supplier provides you with the optimal value

5. Other Supplier Selection Criteria Cost-plus purchasing One-stop shopping Stockless purchasing Cash-and-carry Standing orders Computer hookups Co-op purchasing Local or national source

6. Other Supplier Selection Criteria, Cont. Delivery schedule Ordering procedures Credit terms Minimum order requirements Variety of merchandise Lead time Free samples Returns policy Reciprocal buying Barter Cooperation in bid procedures Size of firm Number of back orders Substitution capability Buyout policy Suppliers facilities Long-term contracts Case price Bonded suppliers

7. Other Supplier Selection Criteria, Cont. Consulting services Deposits required Willingness to sell storage Suppliers who own hospitality operations Socially responsible suppliers References

8. Supplier-Buyer Relations Supply house officers set the tone of their business – They set the overall sales strategies – They sponsor product and market research Suppliers train their sales staffs Suppliers keep their salespersons’ promises