Documente Academic
Documente Profesional
Documente Cultură
(CUSCM 208)
Supplier Selection
1
Overview
Learning Objectives
Introduction
Definitions
Suppliers List
Evaluation and Selection Decisions
Supplier Selection and Evaluation Process
Potential Supply sources
Supplier selection process
2
Introduction
In today’s competitive environment,
progressive organizations must be able to
produce quality products at reasonable
prices.
Product quality is a direct result of the
production workforce and the suppliers.
Buying companies select suppliers based on
their capabilities, and not purely on the
competitive process. The current trend in
sourcing is to reduce the supplier base.
In order to select suppliers who continually
outperform the competition, suppliers must
be carefully analyzed and evaluated.
3
Definitions
Supplier: “External Supplier Selection:
entity that supplies “The stage in the
relatively common, buying process when
off the shelf, or the intending buyer
standard goods or chooses the
services” (Business preferred supplier or
Dictionary) suppliers from those
qualified as suitable.”
(Westburn
Dictionary)
4
Supplier List
A comprehensive list that shows the
preferred suppliers for an organisation or
a product or service .
It is formulated after supplier evaluation
has been done .
Suppliers can be notified to submit their
bids so that they can be considered for
evaluation
5
Class Activity
Identify requirements that suppliers may
need to submit in order to be considered
for supplier selection
6
Evaluation and Selection Decisions
During new product development
Due to poor existing supplier
performance
At the end of an existing contract
Buying new equipment
Expanding into new markets or product
lines
Receiving internal user requisitions
18
Key Suppliers Evaluation Criteria
Price, quality, and delivery
Management capability
Employees capabilities
Cost structure
Total quality performance, systems, and
philosophy
Process and technological capability
R Pashapa 22
Categorical system
This system requires the assignment of rating to each
selected performance category.
Examples of possible ratings include excellent, good,
fair or poor. Internal users often provide input when
determining the rating.
Receiving personnel may provide input about
suppliers’ delivery performance while quality
personnel provide input about quality performance.
R Pashapa 23
Weighted Point system
A weighted-Point system weighs and quantifies scores
across different performance categories.
This approach to supplier measurement usually
features higher reliability and moderate
implementation costs.
Cost-based system
This approach qualifies the total cost of doing
business with a supplier.
The lowest purchase price is not always the lowest
total cost for an item or service.
R Pashapa 24
Initial Supplier Evaluation
Category Weight Subweight
Score Weighted
Subtotal
(1 - 5 scale) Score
Quality Systems 20
Process control systems 5 4 4.0
Total quality commitment 8 4 6.4
PPM defect performance 7 5 7.0 17.4
Management Capability 10
Management/labor relations 5 4 4.0
Management capability 5 4 4.0 8.0
Financial Condition 10
Debt structure 5 3 3.0
Turnover ratios 5 4 4.0 7.0
Cost Structure 15
Costs relative to industry 5 5 5.0
Understanding of costs 5 4 4.0
Cost control/reduction efforts 5 5 5.0 14.0
Delivery Performance 15
Performance to promise 5 3 3.0
Lead-time requirements 5 3 3.0
Responsiveness 5 3 3.0 9.0
Technical/Process Capability 15
Product innovation 5 4 4.0
Process innovation 5 5 5.0
research and development 5 5 5.0 14.0
Information Systems Capability 5
EDI capability 3 5 3.0
CAD/CAM 2 0 0.0 3.0
General 10
Support of minority suppliers 2 3 1.2
Environmental compliance 3 5 3.0
Supply base management 5 4 4.0 8.2
Total Score 80.6
A Good Supplier Does the
Following:
Builds quality into the product, aiming for
zero defects
Makes delivery performance a priority
Demonstrates responsiveness to a buyer’s
needs
Works with the buyer to reduce lead
times
28