Supplier selection matrix with total risk factor

What the tool is for

Choosing a supplier is a decision with several criteria and several options, which is exactly what a weighted decision matrix is built for. The team agrees the criteria and their weights first, then scores every candidate against the same scale. The matrix does not make the decision; it makes the reasoning visible, so that a choice can be explained and challenged.

The tool works in three layers, in the order a good selection runs:

1. Must-haves. Knock-out requirements such as a verified certificate, capability on the critical characteristics, or regulatory declarations. A candidate that fails one is out, however cheap it is. This stops a weak supplier winning on points.
2. Weighted criteria. Quality, delivery, total cost, capacity, technical support, financial stability and so on, each with a weight. Each candidate is scored 1 to 5, and the weighted total is the sum of weight × score. The tool also shows it as a percentage of the maximum possible, so the result reads the same whatever the weights add up to.
3. Total risk factor. A candidate can score well today and still be a poor choice: a sole source in a flood zone, a shop with losses two years running, or one that would have to fill its last spare capacity to take your work. Each risk factor is rated 1 (low) to 5 (high) and weighted; the total risk factor is the weighted average. Candidates above the high threshold are flagged and are only chosen with a mitigation plan.

Where the scores come from

A score is only as good as its evidence. For current suppliers, use performance history: PPM, on-time delivery, corrective action records. For new candidates, use an audit (on-site, virtual or desktop), a self-assessment questionnaire, samples measured for capability, a financial report, and a check of third-party certification with the registrar rather than a copy of the certificate. Write the scoring guide (what earns a 1, a 3 and a 5) before scoring, so two evaluators give the same candidate the same score.

Reading the result

• The chart plots each candidate's weighted score against its total risk factor. The best place to be is right and low: high score, low risk.
• The sensitivity table recalculates the winner with each weight dropped and doubled, and with equal weights. If the winner changes when one weight moves, the decision rests on that weight; agree it explicitly.
• A gap of a few points between two candidates is within the error of 1-to-5 scoring. Decide between them on the evidence, a trial order, or a second audit.

After selection, the chosen supplier still has to qualify the part (see the PPAP and qualification plan), and its ongoing performance belongs on the supplier scorecard. For choosing between improvement projects rather than suppliers, use the project selection matrix.

On the exam

The CSQP Body of Knowledge asks you to develop the selection and qualification process using decision analysis and total risk factor analysis (I.B.1), compare existing suppliers on capability, capacity, quality, delivery, price, lead time and responsiveness (III.B.1), assess new suppliers through self-assessments, audits, financial analysis and verified certification (III.B.2), and select using weighted decision and selection matrices (III.B.3). Decision analysis also appears as a risk analysis tool (II.B.1). The CQPA covers criteria for selecting, approving and classifying suppliers (IV.D.1), the CQE applies supplier qualification, certification and evaluation (I.H.1), and the CMDA covers supplier qualification and risk-based classification under purchasing controls (III.D.4). Expect to calculate a weighted score, spot a knock-out criterion, and explain why the lowest price is not the lowest total cost.

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