SUPPLIER SELECTION
Usually suppliers are selected based on their performance in terms of cost, quality, and delivery reliability. In addition, supplier criteria includes factors such as management compatibility, goal congruence, and strategic direction of the supplier firm.
Stages in Supplier Selection and Evaluation
There are four stages in supplier selection and evaluation and they are briefed in Table 1.
Table 1. Stages in supplier selection and evaluation
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1. Survey Stage: ✓ In survey stage, based on the information available through catalogues, advertisements, brochures, etc., a list is drawn up for further investigation.
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2. Enquiry Stage: ✓ In enquiry stage, a detailed analysis is made after obtaining required information.
✓ Standard enquiry forms are sent to the vendors, requesting them to furnish information. This may be followed by plant visit if necessary to have first hand details.
✓ The vendor’s present customers may be enquired regarding his performance, promptness in delivery, etc.
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3.Negotiation and Selection Stage: ✓ During the enquiry stage itself, many of the vendors might have been dropped from the original list as unsatisfactory. ✓ The remaining vendors may be called for direct negotiations to discuss various terms and conditions like payment terms, discounts, supply procedures, quality control procedures, etc.
✓ As a result of this a final list of approved vendors is drawn up.
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4. Experience Stage: ✓ In this stage, the performance of the supplier is evaluated mainly on basis of quality and promptness in delivery. ✓ A history card is maintained for each vendor. The card contains information like dates of supply of materials of by vendor, inspection, procedure adopted, acceptance or otherwise of the lost supplied. ✓ Frequent rejections may upset the production schedule in the buyer’s company and result in heavy losses, hence such vendors might be dropped from the list. ✓ Similarly the late deliveries may cause stoppages in production, otherwise large inventories may have to be carried in stock. Both the situations are not desirable and hence such vendors are also reviewed for continuance as suppliers. |
