There are two main approaches used in selecting suppliers
- Supplier appraisal/- used to select potential /new suppliers.
- Vendor rating-used to assess already performing suppliers.
This is the assessment of the potential suppliers so as to be used as one of the company‟s suppliers. Thus, the concern is with the selection of the next suppliers. The main techniques used in supplier appraisal are:
This is the where an analysis of the supplier’s document is done. The documents include: balance sheet, profit and loss account, organization chart e.t.c. This analysis is done by use of statistical tools and ratio analysis. This enables the buyer to make informed judgement on the potential of the supplier to be.