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CHAP7 - Coggle Diagram
CHAP7
Key Supplier Evaluation Criteria
Management capability
Management capability
Cost structure
Total quality performance, systems,
and philosophy
Process and technological capability
Primary criteria
Cost or price, quality, and delivery
Sustainability and environmental
compliance
Financial stability
Scheduling and control systems
E-commerce capability
Supplier’s sourcing strategies, policies,
and techniques
Longer-term relationship potential
Reducing Supplier Evaluation and
Selection Cycle Time
Utilize data warehouse software with
supplier information
Map current evaluation and selection
process
Integrate with internal customers
Engage third-party support
Integrate technology into organizational
design
Product families or groups of products
Commodity CFTs
Supplier categorization
Electronic tools
Predefined contract language and
shorter contracts
evaluation and selection process
Can involve intensive effort and a major commitment of resources
Many issues and decisions
Overall objective is to reduce sourcing risk and maximize value to the buyer
Need to select suppliers for long-term
evaluation and Selection Decisions
Reducing the supply base
Buying new equipment
Internal users submit requisitions
New product development
Poor internal or external supplier performance
End of the contract period
Expanding into new markets or products lines
Current suppliers have insufficient capacity
Identify Key Sourcing Requirements
Develop a supplier evaluation and selection survey
Key supplier evaluation criteria
May be determined by internal and external customers within the value chain
Reducing supplier evaluation and selection cycle time
Determine Strategy
The environment changes
User preferences
Market conditions
Corporate objectives
No single strategy will satisfy all
situations
Influences the approach taken
Reevaluate as necessary
Identify Potential Supply Sources
How well existing suppliers can satisfy cost, quality, or other performance variables
Strategic importance of purchase requirement
Technical complexity of the purchase requirement
Sourcing Alternatives
Manufacturer vs. distributor
Supplier-managed inventory
Storage space available
Size of purchase
Manufacturer’s policies on direct sales
Extent of services required
Integrated supply
Local, national, or international suppliers
JIT or lean manufacturing support
Interpreting Financial Ratios
Steps in Developing a Supplier
Evaluation and Selection Survey
Kraljic Matrix
