Supplier selection decision tree template
A supplier selection decision tree: seven tests from approved supplier and tender threshold through to cost and risk, ending in five named sourcing outcomes.
How it works
Open the template as a chart
Open the supplier selection decision tree and use it as a new chart. Nothing is locked: every lane, test, branch label and outcome can be renamed, moved or deleted.
Set the thresholds that drive the route
"Spend above tender threshold?" is where your rules live. Write the value bands into the note: below which figure a single quote is enough, where three quotes start, and where a full tender becomes mandatory. State the currency, and state whether the threshold applies per order or to the aggregate annual value with that supplier, or requirements will be split to stay underneath it. If you are a public body, take the figures and the notice requirements from the procurement regulations you work under rather than from this template.
Name who answers each question
Replace Requester, Procurement, Technical and compliance, and Finance and risk with the roles that actually hold the decision. One lane per decision-maker, not per person, so the chart survives someone changing job. If technical review and compliance sit with different people in your organisation, split that lane in two — it is the lane most often shared by accident.
Write the mandatory criteria down as pass or fail
Put the criteria behind "Meets mandatory criteria?" into its note: technical specification, certification valid for this scope, insurance, and any regulatory or data protection requirement. Keep weighted scoring out of this test. Mixing a pass-or-fail requirement into a scored matrix lets a supplier compensate for a mandatory failure with a good price, which is the single most common defect in a selection decision.
Define what a single-source justification must contain
Name the fields on "Record single-source justification": why no other supplier can meet the requirement, what was done to test that, the value, the duration, and who authorised it. Give each justification an expiry date so it is re-tested at renewal rather than rolled forward, and check that the constraint is genuine rather than created by a specification written around one supplier's product.
Agree what each endpoint hands over to
This chart stops at the route decision. Three quotes, a tender and an award each start their own process, so link "Run three-quote comparison" and "Run full competitive tender" to your procurement process map, and the two award outcomes to the purchase order process, instead of documenting the same steps twice and letting the two versions drift apart.
Circulate it and keep one current version
Share the chart with Procurement, Finance and every approver named in it, capture their approval, and link the approved version from your purchasing policy. Use the version history so that when a threshold changes you can show which rule applied on the date an award was made.
Frequently asked questions
What is a supplier selection decision tree?
It is a diagram of the tests that decide how a supplier is chosen for a given requirement, with the answers written on the branches. Rather than listing sourcing tasks in order, it asks whether an approved supplier already covers the requirement and has capacity, whether the spend sits above the competitive-tender threshold, whether the requirement is genuinely specialist or single-source, whether the supplier meets mandatory technical and compliance criteria, whether total cost of ownership is within budget, and whether risk assessment passes. Each path terminates in a named outcome — direct award, three quotes, full tender, a justified single source, or rejection — so the route is decided by the evidence rather than by whoever is asked.
How is this different from a procurement process flowchart?
A procurement process flowchart is a cross-functional map of what happens next and who does it, from identifying a need through specification, funding, tender, award, contract, delivery and performance review. A decision tree covers a much narrower question: which of several routes this requirement qualifies for, and who is entitled to answer each test. It has more decisions than tasks, its branches carry answers rather than actions, and its paths end at different outcomes instead of rejoining one flow. Most organisations need both — the tree usually sits inside the route-to-market step of the process map.
When do you need three quotes, and when do you need a full tender?
That depends on rules you set and record, not on convention. Most commercial organisations use value bands in a delegation of authority: a single quote below a low threshold, three quotes in a middle band, and a full competitive tender above it, with an exception route for genuine single-source cases. The template leaves the figures blank on purpose, because a threshold copied from another organisation is not defensible. Two details matter as much as the numbers: whether the threshold is measured per order or against aggregate annual spend with that supplier, and who may authorise an exception. Public bodies do not set these figures themselves — the thresholds, publication requirements and standstill rules come from the procurement regulations in their jurisdiction.
What criteria should decide which supplier is selected?
Separate the mandatory ones from the scored ones. Mandatory criteria are pass or fail: the technical specification, certification valid for the scope being bought, insurance, and any regulatory or data protection requirement. A supplier that fails one is not selectable at any price, which is why the chart tests them before cost. Everything else — price, total cost of ownership, lead time, service levels, sustainability — is scored against weightings agreed before bids are opened. ISO 9001:2015 clause 8.4 expects an organisation to determine criteria for evaluating, selecting, monitoring and re-evaluating external providers and to retain documented information on the results, but it prescribes neither the criteria nor the weightings.
When is a single-source award acceptable?
When only one supplier can genuinely meet the requirement — proprietary technology, a compatibility or continuity constraint, or a real emergency — and the reason is documented before the award rather than reconstructed afterwards. The test to apply is whether the constraint is real or manufactured by your own specification, since a requirement written around one product creates its own sole source. In this chart the Single source branch cannot reach an award without passing through a recorded justification and a risk assessment, because a non-competed award has no market price test to fall back on. Give each justification a value, a duration, a named approver and an expiry date.