The Procurement Glossary » Preferred Supplier

Preferred Supplier

Sourcing & RFx

Definition

A supplier a business has chosen to favour for a category, usually because of negotiated pricing, reliability or a framework agreement.

Explanation

Steering buyers to preferred suppliers channels spend to negotiated rates and reduces maverick buying. Preferred-supplier lists are often built into the catalog and approval rules so the compliant choice is also the easy one.

Example

The catalog flags the two preferred stationery vendors, and off-list purchases require extra approval.

Related terms

• Approved Supplier List (ASL) — A controlled list of suppliers that have been vetted and authorised to supply a business, often by category.
• Framework Agreement — An umbrella agreement setting pre-negotiated prices and terms with one or more suppliers, from which individual orders are placed as needed.
• Maverick Spend — Purchasing done outside agreed processes, contracts or preferred suppliers — 'off-contract' buying.
• Supplier Consolidation — Reducing the number of suppliers in a category by concentrating spend with fewer, better-managed vendors.

Frequently Asked Questions

What is Preferred Supplier?

A supplier a business has chosen to favour for a category, usually because of negotiated pricing, reliability or a framework agreement. Steering buyers to preferred suppliers channels spend to negotiated rates and reduces maverick buying. Preferred-supplier lists are often built into the catalog and approval rules so the compliant choice is also the easy one.

Can you give an example of Preferred Supplier?

The catalog flags the two preferred stationery vendors, and off-list purchases require extra approval.

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