Supplier Selection
Introduction
The evaluation and selection of suppliers, structuring the supplier base is an important task in any organization. It assumes utmost importance in the current scenario of global purchasing. Every Organization especially manufacturing organizations need to have a Supplier evaluation matrix or model in place. This paper tries to bring in a typical
Supplier Evaluation Framework, which blends with company’s basic values, and help in establishing a Strategic sourcing policy. It also outlines ways and means to reward a supplier and establish long-standing relationships with suppliers.
Vendor selection range of criterions
Today’s consumers demand cheaper, high quality products, on-time delivery and excellent after-sale services. Hence, companies are under intense pressure to cut product and material costs while maintaining a high level of quality and after-sale services. Achieving this starts with supplier selection. Therefore, an efficient supplier selection process needs to be in place and of paramount importance for successful supply chain management. It begins with the realisation of the need for a new supplier; determination and formulation of decision criteria; pre-qualification (initial screening and drawing up a shortlist of potential suppliers from a large list); final supplier selection; and the monitoring of the suppliers selected (i.e. continuous evaluation and assessment).
The supplier selection can be seen as decision making under uncertainty and can be illustrated by a decision tree diagram as follows:-
| | | | | | a | Satisfactory | | | | | | | | | | Supplier | A | | | | | | | | | | | 1a | Unsatisfactory | | | | | | | | | | | | | | | | | | | | | | b | Satisfactory | | Supplier | B | | | | | | | | | | | | | | | | | | | 1b | Unsatisfactory | | | | | | | | |
Above diagram show a simple decision making situation with only two
The evaluation and selection of suppliers, structuring the supplier base is an important task in any organization. It assumes utmost importance in the current scenario of global purchasing. Every Organization especially manufacturing organizations need to have a Supplier evaluation matrix or model in place. This paper tries to bring in a typical
Supplier Evaluation Framework, which blends with company’s basic values, and help in establishing a Strategic sourcing policy. It also outlines ways and means to reward a supplier and establish long-standing relationships with suppliers.
Vendor selection range of criterions
Today’s consumers demand cheaper, high quality products, on-time delivery and excellent after-sale services. Hence, companies are under intense pressure to cut product and material costs while maintaining a high level of quality and after-sale services. Achieving this starts with supplier selection. Therefore, an efficient supplier selection process needs to be in place and of paramount importance for successful supply chain management. It begins with the realisation of the need for a new supplier; determination and formulation of decision criteria; pre-qualification (initial screening and drawing up a shortlist of potential suppliers from a large list); final supplier selection; and the monitoring of the suppliers selected (i.e. continuous evaluation and assessment).
The supplier selection can be seen as decision making under uncertainty and can be illustrated by a decision tree diagram as follows:-
| | | | | | a | Satisfactory | | | | | | | | | | Supplier | A | | | | | | | | | | | 1a | Unsatisfactory | | | | | | | | | | | | | | | | | | | | | | b | Satisfactory | | Supplier | B | | | | | | | | | | | | | | | | | | | 1b | Unsatisfactory | | | | | | | | |
Above diagram show a simple decision making situation with only two