VENDOR/ CONTRACTOR/ SUPPLIER SELECTION DURING & POST LOCKDOWN

It is been quite a long time and our mother India is reeling under the economic burden as a consequence of three consecutive enforced lockdown. Business activities are witnessing their all-time low. India is having an unemployment rate of 25% today against 8.4% prior to Lockdown as per CMIE. With each passing day, the government is giving some of the other relaxation. But with each relaxation, India is witnessing an increase in the number of positive confirmations of Corona patients. Construction and interior transformation industry are the worst hit segment which contributes about 9 % to the GDP of India. However, with a few specific guidelines’ central government in coordination with respective state governments has allowed to resume the work on construction sites. So, it is of utmost importance to treat each aspect of vendor selection criteria very critically and logically. Let us raise our awareness with those-

• Capital strength- Before finalizing any vendor, his/ her capital strength i.e. liquidity and cash flow must be ensured. This is to ascertain whether or not the prospective vendor will be able to carry the work consistently until it is accomplished.
• Manpower availability- It must be ascertained, the vendor or supplier is having sufficient manpower- plumber/ electrician/ carpenter/ painter/ mason/ labor/ supervisor, etc. As we are well aware, most of the labour is seeking their way back to their natives. It becomes imperative for us to ensure that there exists a good understanding between labour and contractor. Moreover, they must be fit and healthy to as to ensure a conducive work environment at the site.
• Material, tools & equipment availability- Because of enforced lockdown, the supply chain has been greatly disturbed. Manufacturing processes were also put on hold which are now being gradually uplifted. However, because of restrictions on inter-state movement, there has been a disruption in the availability of raw materials- paint/ plywood/ plant & machinery/ spare parts, etc. Hence, prior to the start of work please have a clear communication with respect to the scope of work and availability of resources with respect to the scope. This is to ascertain the fact that work faces no temporary closure or any type of delay.
• Payments & Budgeting- Many of the works which earlier used to be executed on item rate or lump sum method od procurement will now have to be dealt with a certain amount of vigilance. This is because of disruption in the cash flow and liquidity. Vendors need money to procure resources and pay for their manpower. Hence, deciding and working upon suitable terms of payment must be discussed open-heartedly between both the parties. Things must not be taken for granted. Money issues may lead some of the worst disputes thereby jeopardizing the interests of both the parties.
• Experience & Expertise- It is preferable to award a contract to the entity having maximum and most relevant experience and also one who offers the most competitive pricing. But today we must not also think about maximizing the profits. As of now, many workers have been laid off and many will be laid off in times to come if current disaster continues. We must consider that if an entity wants to try his/ her hand at some new task, we should try to help them out by referencing them to suitable stakeholders.
• Planning- Consideration should be paid to those proposals that clearly enumerate the proper workflow in the most logical and concise manner. Before onboarding a new vendor or re-negotiating with the previous ones all the aspects with respect to worst-case scenarios must be considered. These scenarios are subjective and vary from one place to another. Ensure that we provide an optimum buffer with respect to time and cost without compromising with the quality and scope of work.
• Material Management- Savings can only be maximized and profits can only be earned along with quality maintenance by keeping in strict adherence with respect to material management at the site. Previous record of vendors/ suppliers must be analyzed and evaluated before awarding the work.
• Environment, Health & Safety- It is of utmost importance that the vendor/ supplier should pay special concern to the environment protection, personal safety, health and hygiene of their workforce. Keeping a strict checklist and adhering to the same will not only help avert our susceptibility to catching corona but will also enhance the quality of work and livability.

Thus, if we keep in mind the above aspects, it will help the client to take better rational decisions. Also, vendors/ suppliers/ contractors will also be better able to prepare themselves to take care of the adversities. However, it is my humble request not to force any of the parties to work on credit because vendors have their labours and workers whom they have to pay on a daily wage basis. As it is because of lockdown many of them have exhausted all their savings. Also, Vendors should be transparent in accepting any offer or making any proposal. They should only do so if they are confident of completing the work without any disruption. They must not play with the client just to obtain momentarily relief by demanding for advance payment or intermediate payments. It should be a win-win situation for both the parties. Above considerations are applicable for all the industries- construction, healthcare, manufacturing, agricultural, IT, etc.