Lecture Purchasing and supply chain management (3/e): Chapter 8 - W. C. Benton

Chapter 8 - Supplier selection and evaluation. Supplier selection is addressed in Chapter 8. The selection of suppliers is a complex and demanding question that has no real correct answer. Each firm must weigh the benefits and risks of single and multiple sourcing.

Purchasing and Supply Chain Management

3rd edition

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Chapter 8:

Supplier Selection and Evaluation

Purchasing and Supply Chain Management, 3rd edition, Copyright 2013, W. 

C. Benton Jr., All rights reserved

professional purchasing managers

Strategic Make vs. Buy

Decision

1 Determine what product or service is under consideration. 

2 Consider the in­house capability.

• Not being proficient at identifying own core capabilities 

• Waiting too long to assess the value of consultants or strategic 

partners

• Not recognizing that the product or service is approaching 

maturity

• Not recognizing that there are always new competitors with 

• Expanding into areas that are at different points on the same  production path

areas

• A delegation of production capabilities

core capabilities 

Outsourcing and Supplier Selection

important purchasing activity.

and carefully selecting the correct supplier.

continuous supplier performance achievement.

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management:

• Businesses purchase larger percentage of product value 

• The shrinking supplier bases

• Increasing shortages of skilled supplier capabilities and resources

The 4 Pure Supply Management 

Relationships

• Lose­Lose

• Win­Lose

• Win­Win

• Win­Win

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• Supply difficult to replace essential materials and capabilities 

• Maintaining and strengthening these relationships are a major  concern

• Important but replaceable with alternative suppliers

• Provide easily to replace non­critical resource

The 3 Common Supplier Evaluation Systems

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buying firm must be established

• Owner of a specific strategic supplier relationship 

• Supplier profiles

• Strategic Supplier Performance Review Process

• Supplier development

The Strategic Supplier Performance Review 

Process

feedback to the strategic suppliers.

• Consistent measurements for evaluating current performance of  existing strategic suppliers

• Must have a standard template for a customized review process

• The template should include a personal meeting with the 

functional manager

• The general review process should take approximately two 

workdays to complete

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Supplier Development

• Take advantage of the learning opportunities 

• Improve its overall performance with the buying firm and with its  other customers

1 Supplier evaluations

2 Communicate the problem and motivate the supplier to 

change its results

• Supplier evaluation report card

3 Implement SDP

• Create formalized routine communications

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Supplier Reduction

• Grade methods

• Based on a score or grade given to the supplier by the buyer for some  attribute

• Hurdle

• Suppliers are required to “jump” over higher and higher hurdles to win  the buyer’s business

• E.g., certification

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Questions?