How to effectively review your preferred supplier list

For a business which can rely heavily on industry relationships and good contact networks, establishing a preferred supplier list (PSL) can be vital for sorting out your most trusted partners. A PSL can be a good way of doing this, but there is also the downside of a potential lack of flexibility on occasion.

If not properly managed, a PSL can be so full of supplier details that it could inhibit effective supplier management and damage your business.

Consistently reviewing your preferred supplier list is essential for it to remain an effective business tool, rather than a constraint to growth and progression.

But how do you actually review your PSL? Its important to follow a process to ensure that you retain useful contacts and end up with a supplier list that will serve your business well.

In this blog we look at the top questions you should be considering when assessing who to remove or keep on your list.

Be consistent and concise

A major failing of many businesses with their preferred supplier list is that they do not set consistent criteria. Creating a generic PSL document for all suppliers to fill in is very important.

You should also look to divide your PSL into each specialism within your business i.e. marketing, finance, HR etc. Breaking down your PSL in this way makes sure that recruiters can put themselves forward for the particular areas they know they can help with, instead of responding to every request.


This is particularly important and a key question that should form part of your PSL form.

Does your agency have a compliance certificate when it comes to handling sensitive data? Are they compliant with industry standards? How about equality and anti-discrimination laws?

Your suppliers need to be aware of the laws and be able to persuade you that they take them seriously – they should also be able to clearly demonstrate how they are compliant.

What’s their history with your business?

A key way of reviewing a supplier is to take a look at its previous history with your business, which should give you a good idea as to whether it should be on the list.

What have the agencies placements been like? What have the ratios of CVs to interviews or hires looked like? Ideally you should have three candidates coming back for second interviews, as this will give you an 80% chance of filling the vacancy.

Has the agency worked in your area? Or for a direct competitor?

An agency working for a competitor is often viewed too quickly as a conflict of interest, but in the recruitment sector it could actually be a big benefit because the consultants will know your area well.

The only time it might become difficult if is you’re looking at headhunters on your PSL because it could restrict where they can look for candidates.

Does the supplier have any case studies of working with other clients similar to you?

That last point is particularly important because if the agency hasn’t worked with you or even within your sector before, it needs to demonstrate the ability to fulfil the specific job required..

Should you be looking for a two tier approach?

Having two tiers of recruitment agency on your PSL can actually be very beneficial because it allows you to maintain a level of industry expertise within your preferred agencies, and also gives you access to an independent or generalist resource if required.

Ideally Tier 1 should be made up of two specialist recruiters working within slightly different networks.

Your Tier 2, which should be a generalist agency, can serve as an effective backup in the event your Tier 1 can’t take on your requirements or doesn’t find you a good candidate. Having access to a preferred agency with a generalist knowledge can widen the future talent pool and hence prove beneficial.

In the end, preferred supplier lists need to be optimised and managed to ensure they are working for you and require constant evaluation.

Creating your PSL is just the first step. Letting it grow wild and out of control will create far more supplier management headaches and problems down the line than it will ever fix.

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