Supplier selection and evaluation – BLC /05 Procurement Management
Explain the process of planning resource use to achieve objectives Evaluate sources of supply to meet planned objectives. These criteria can readily . Supply Chain Strategy for a Cloud Economy. Strategy 1: Adopt a demand- driven planning and business operating model based on continually fine-tune operations to ensure responsive agility to meet changing demand. Increasingly, supply chain management is being recognized as the management of Source: Adapted from Douglas M. Lambert, Martha C. Cooper, and Janus D. Pagh, “Supply Chain Agreements (PSA) to meet the needs of key In summary, the objective of customer responsible for planning how each of the possible.
The s brought about a renewed awareness of the impact that industry has on the environment.
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This includes, but is not limited to, the proper disposal of hazardous waste. Willingness to share technologies and information: Suppliers can assist in new product design and development through early supplier involvement to ensure cost-effective design choices, develop alternative conceptual solutions, select the best components and technologies, and help in design assessment.
By increasing the involvement of the supplier in the design process, the buyer is free to focus more attention on core competencies. In some cases, an organisation may be looking to develop a long-term relationship with a potential supplier. This approach requires that the parties share their mutual goals, establish metrics to guide the relationship and develop a series of ongoing discussions on how issues and conflicts can be resolved in a mutually beneficial manner.
These relationships may also involve joint cost-savings projects and new product-development efforts.
During the selection stage, sometimes organisations need a structured way to evaluate alternative suppliers. This can be particularly hard when the criteria include not just quantitative measures such as costs and on time delivery rates but other, more qualitative factors, such as management stability or trustworthiness.
A supplier selection scorecard may be used as a decision support tool. The evaluation team will assign a weight to the different categories and develop a numerical score for each supplier in each category, thereby developing a final performance score. It should be mentioned here that the need for assessment does not end with the selection decision, however. After the buyer-supplier relationship has been established, buyers also must track supplier performance over time.
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Passing on risk to a supplier or outsourcing a service often requires more management of the supply chain, not less. The challenge of the purchasing department is to get the supplier interested in working with your business, getting them to invest in the long-term relationship.
The department also has to manage relationships within your company. It has to work with internal stakeholders such as marketing, finance, logistics and distribution to ensure that they are all aligned.
Improve quality Purchasing departments can help to improve quality by establishing target performance levels for quality and then tracking performance against those targets. Critical to quality characteristics is a typical metric used to measure things such as durability, the look and feel of the product or the timeliness of delivery.
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Some companies work closely with their vendors to develop their processes and assist them in improving quality. Pursue innovation Because the purchasing department is always in contact with a variety of outside businesses, it is in an ideal position to source innovative goods and services that can provide a competitive advantage to your business—an edge in either price, quality or convenience.
Later, these two areas evolved into the logistics function or process that coordinates and integrates the inbound and outbound flows of the organization.
A true supply chain emerges when multiple organizations synchronize their respective processes and adopt a more holistic supply chain management philosophy that includes strategic consideration of related areas. This includes finance, marketing, planning, and technology. Although the field of supply chain management has rapidly evolved over the last 30 years, many organizations are in the early stages of their supply chain development, and few have fully achieved their desired state of supply chain maturity.
This developmental journey is highlighted in Figure Figure The journey to supply chain management Late adopters of supply chain management must deliberately replace functional silos and cost goals with aligned internal processes.