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Chapter Overview
One of the most important processes
performed in organizations today is the
evaluation, selection and continuous
measurement of suppliers.
Enlightened purchasers commit major
resources to this process.
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Chapter Overview
This chapter provides an overview of the
evaluation and selection process.
Critical issues in supplier selection are
discussed.
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Chapter Overview
A sound supplier selection decision today
can reduce or prevent a host of problems
tomorrow.
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Supplier
Management
Supplier
Development
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Supplier Evaluation
and Selection Process
1. Recognize the need or supplier selection
2. Identify key sourcing requirements
3. Determine sourcing strategy
4. Identify potential supply sources
Purchasing and Supply Chain Management, 3e Monczka/Trent/Handfield
Thomson Learning
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Supplier Evaluation
and Selection Process
5. Limit suppliers in the pool
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Quality
Cost
Delivery Performance
Technological Capabilities
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CAPABILITY
HIGH
Hi capability/
Hi strategic importance
Hi capability/
Lo strategic importance
MINOR to MODERATE
INFORMATION SEARCH
MINOR INFORMATION
SEARCH
Lo capability/
Hi strategic importance
LOW
LOW
MAJOR INFORMATION
SEARCH
Lo capability/
Lo strategic importance
MINOR to MODERATE
INFORMATION SEARCH
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Supplier visits
Use of Preferred suppliers
External or Third-party information
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Competitive Bid
Negotiations
Weighted factor approach
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Do it when?
Why do it?
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Liquidity
Ratios
Leverage
Ratios
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Activity Ratios
Profitability
Ratios
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Effective Supplier
Assessment
Survey or Audit
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STEP 2
STEP 3
STEP 4
DEVELOP
THE
SURVEY
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STEP 5
STEP 6
STEP 7
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ASSESS/
SELECT
SUPPLIER
REVIEW
PERFORMANCE
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Size Relationship
-Not big enough to make an impact
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Competitors as Suppliers
-Limits
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Countertrade Requirements
-Boeing purchases portion of requirements in
markets where it hopes to do business or where
it must satisfy countertrade requirements of
international government
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