A preferred supplier is a supplier or group of suppliers that an organization has identified as its first choice for a particular product or service. This is typically based on the supplier's ability to meet the company's needs in terms of price, quality, delivery time, and other criteria.
A preferred supplier is usually selected after an evaluation process with the status typically granted for a specified period, often with the option to renew or extend the agreement.
Having a preferred supplier can offer several benefits for the company, such as cost savings through volume discounts or negotiated pricing, improved supply chain efficiency through better communication and collaboration, and reduced risk through a more stable and reliable supplier relationship. Equally, having preferred suppliers can streamline the procurement process through automation reducing administrative burden.
It is important for the organization to continuously monitor and evaluate the performance of its preferred suppliers to ensure that they continue to meet the organization's needs and expectations.