Supplier Identification and Evaluation PDF

SUPPLIER IDENTIFICATION AND EVALUATION  The supplier selection process is the bedrock of strategic acquisition and a source of supply advantage. The valuation process’s ultimate aim is to minimize buying risk while improving the net value to the customer. The goal of supplier evaluation is...

SUPPLIER IDENTIFICATION AND EVALUATION  The supplier selection process is the bedrock of strategic acquisition and a source of supply advantage. The valuation process’s ultimate aim is to minimize buying risk while improving the net value to the customer. The goal of supplier evaluation is to guarantee that a potential supplier will meet technical, financial, and commercial criteria. On the other hand, an existing manufacturer supplier assessment is a procedure that compares a supplier’s performance over time against a set of standards. 3 kinds of supplier assessment and selection theories method-based assumptions supplier appraisal specification models supplier selection criteria Selection and Evaluation Process in Supply Chain Management Acknowledge the need for supplier sourcing Determine the criteria for supplier sourcing. Identify sources of potential suppliers. Shortlist the suppliers from selection process. Determine methodology to assess and evaluate suppliers. Evaluate and select the supplier. Contract/ Agreement signing with the selected supplier.  Suppliers Selection Criteria The supplier evaluation and sourcing method are extremely important for service supply chain management because of the characteristics of the service delivery phase. Suppliers provide a significant impact on customer satisfaction during service cycles since they usually contact customers directly to deliver facilities. Guidelines that are used as criteria in the sourcing of vendor in the hospitality industry 1. Process and Design Capabilities - Suppliers can include up-to-date competent components, as well as the process technology needed to produce the required content. 2. Quality and Reliability - Component quality must adhere to specified standards on a daily basis because it has a direct effect on the content of the finished goods. 3. Cost - The actual cost of ownership includes the material’s unit price, payment terms, cash discount, ordering costs, carrying costs, logistics costs, maintenance costs, and other intangible expenses that are difficult to quantify. 4. Service - Suppliers must be equipped to provide outstanding service in the event that is needed. 5. Capacity - The organization’s commitment to meet expectations, as well as the provider’s capacity to handle large requests, could be investigated. 6. Location - Geographical location, which affects delivery times, transportation costs, and logistics costs, is also a crucial factor in the selection of the supplier. 7. Management Capability - Management flexibility is shown by management’s commitment to continuous process and product growth, its general technological competence and experience, its capacity to maintain successful relationships with its staff and willingness to create a closer working relationship with the customer. 8. Financial Condition and Cost Structure - Appraisal committees will examine different cost ratios to determine how much retailer would spend on supplies, how it would reimburse its contractors and staff, and how it will meet its flexibility and financial commitments. 9. Planning and Control System - release, coordinate, and track the flow of work within an organization as well as with external parties. 10. Environmental Regulation Compliance - The willingness of a supplier to conform to environmental requirements is increasingly becoming a prerequisite for supply chain partnerships. 11. Willingness to Share Technologies and Information - Early supplier involvement can help with new product design and development by ensuring cost-effective design choices, designing alternate engineering solutions, choosing the best materials and technologies, and assisting with demand assessment. 12. Longer-term Relationship Potential - This approach requires the parties to share their shared goals, create benchmark’s to guide the relationship, and build a series of frequent meetings about how to solve issues and conflicts in a mutually beneficial manner 13. Supplier Selection Scorecards - This is particularly challenging when the criteria include both quantitative(costs and on-times success rates) and qualitative(management stability and trustworthiness) elements. - A supplier preference scorecard can be used as a decision-making tool. SUPPLIER EVALUATION It is worth noting that when it comes to dealing with suppliers, there are two items to consider: 1. Supplier pre-qualification, which happens during the pre-contract assessment phase 2. Supplier performance, which occurs during the post-contractual evaluation time. The first stage entails supplier evaluation, with the aim of ensuring that you have a supplier who can conduct a contract or tender to the required requirements.  Ray Carter’s 10 C’s Concept of Supplier Evaluation You must assess the supplier’s management abilities, willingness to invent, design, and overall ability Capability or Competence to produce and deliver the goods and services you need. You must understand whether the supplier can meet existing and future supply needs. Inquire into Capacity the supplier’s willingness to manage their own supply chain This depends on whether you want a long-term or short-term arrangement, but regardless of which Commitment arrangement you prefer, you should evaluate supplier values like quality, service, and cost- management. You can discover that the changes in the consumer economy cause your vendors to adjust as well, Control System such as environmental regulations that affect how you produce your products.  Examine your supplier’s financial health, including their working capital. Keep in mind that you Cash would not be willing to charge them on a monthly basis. Consistency Inquire about the supplier’s plan and ,if required, order presentation and a test sample. Cost This has to do with their commodity prices as well as other aspects of the actual cost of ownership. At this stage, you can ensure that the supplier’s business standards are compatible with yours, Culture including the issues such as business culture and technology use. Compliance with The supplier’s image in terms of corporate social responsibility and regulatory compliance is an Environment important element in meeting demands and maintaining a long-term relationship. Suppliers with advanced information and communications technology programs are the ones you Communication can depend on to react rapidly anytime you need assistance or have a supply chain concern.  The primary aim of supply chain management is to build good relationships among chain members in order to provide customers with accurate service. Choosing the right supplier, particularly for high-end service providers, means more than just searching for the best deal. Thank you.