Please enable JavaScript.
Coggle requires JavaScript to display documents.
Chap 7: Supplier evaluation and selection - Coggle Diagram
Chap 7: Supplier evaluation and selection
I. Introduction
Importance of supplier evaluation and selection in purchasing and supply chain management
Determines the quality and reliability of products and services received
Affects the organization's ability to achieve its objectives
Impacts the organization's financial performance
Objectives of supplier evaluation and selection
Identify capable suppliers that meet the organization's requirements
Ensure suppliers' ability to deliver products and services on time and with the required quality and reliability
Reduce supply chain risk and enhance supply chain resilience
Optimize total cost of ownership and create value
Key factors to consider in supplier evaluation and selection process
Organizational objectives and constraints
Category-specific requirements and considerations
Market conditions and dynamics
Supplier capabilities and performance
II. Supplier Identification
Methods of identifying potential suppliers
Online searches and directories
Trade shows and conferences
Referrals and recommendations from industry contacts
Requests for Information (RFIs) or Requests for Proposals (RFPs)
Supplier databases
Criteria for selecting suppliers to include in the evaluation process
Capability to meet category-specific requirements and standards
Availability to supply the required products and services in the required quantities and timeframes
Financial stability and ability to meet pricing and payment terms
Regulatory compliance
Reputation and industry standing
Supplier pre-qualification process
Conducting basic due diligence on potential suppliers to ensure they meet minimum requirements
Using pre-qualification questionnaires to gather information on suppliers' capabilities and performance
III. Supplier Evaluation
Evaluation criteria
Cost
Purchase price
Total cost of ownership
Quality
Product and service quality
Compliance with quality standards
Delivery
On-time delivery performance
Flexibility and responsiveness
Service
Customer service and support
After-sales service and support
Innovation
Supplier's ability to offer new products or processes
Supplier's contribution to the organization's innovation efforts
Sustainability
Supplier's environmental and social impact
Supplier's commitment to sustainability practices
Risk Management
Supplier's ability to manage risks related to the category
Supplier's contingency plans to address supply chain disruptions
Weighting and Scoring
Assigning relative importance to evaluation criteria based on organizational objectives and category-specific requirements
Developing a scoring system for each criterion to ensure objectivity and consistency
Calculating the total score for each supplier to compare and rank suppliers
Supplier Evaluation Methods
Self-Assessment
Requesting suppliers to complete a self-assessment questionnaire
Provides insight into suppliers' capabilities and performance
Site Visits
Conducting on-site visits to suppliers' facilities
Enables observation of suppliers' operations and capabilities
Surveys and Questionnaires
Gathering information from suppliers' customers or other stakeholders
Provides feedback on suppliers' performance and capabilities
Performance Data Analysis
Analyzing suppliers' performance data
Provides quantitative measures of suppliers' performance
Reference Checks
Contacting suppliers' references
Provides insight into suppliers' past performance and capabilities
IV. Supplier Selection
Reviewing and Comparing Supplier Evaluation Results
Comparing and contrasting suppliers' evaluation scores
Identifying strengths and weaknesses of each supplier
Narrowing down the list of suppliers
Eliminating suppliers that do not meet minimum requirements or do not provide sufficient value
Selecting a shortlist of suppliers to further evaluate or negotiate with
Negotiating with Suppliers
Discussing terms and conditions of the proposed contract
Negotiating prices, delivery schedules, quality requirements, and other terms
Ensuring legal and regulatory compliance
Finalizing the contract with the selected supplier
Awarding the Contract
Communicating the decision to the selected supplier
Finalizing the details of the contract
Monitoring the supplier's performance to ensure compliance with the contract terms
Developing a relationship with the supplier to ensure ongoing communication and collaboration
V. Supplier Performance Management
Monitoring and Measuring Supplier Performance
Establishing performance metrics and targets
Collecting and analyzing supplier performance data
Identifying areas of improvement and opportunities for collaboration
Communicating Performance Results
Providing feedback to the supplier on their performance
Communicating supplier performance results to internal stakeholders
Taking Corrective Actions
Developing corrective action plans for underperforming suppliers
Enforcing contractual obligations and requirements
Rewarding High-Performing Suppliers
Providing incentives and rewards for suppliers that exceed performance targets
Recognizing and celebrating high-performing suppliers