Post on 07-Apr-2017
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QUESTION:• Discuss How Organisational Buyers Evaluate Potential
Suppliers.
TITLESupplier Evaluation Selection
PRESENTED BYSinqobile Ndebele L013-0961R
&Sibonginkosi Ndhlovu L013- 1354J Supplier Selection
2 March 2017
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CONTENT• Supplier, Buyer Supplier Evaluation Definition.• Brainstorming Exercise.• Approaches to supplier evaluation.• Importance of Suppler Evaluation.• Mitigate Risk.• Supplier Evaluation Selection Process and Criteria.• The Procurement Cycle.• Carter’s 10 C’s of Supplier Selection. • Real World Example.• Tender/Bids.• Bonus – Ethics.• References.
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Supplier: “External entity that supplies relatively common, off the shelf, or standard goods or services” (Business Dictionary)
A supplier is a business or individual that supplies one’s business with products or services that one uses in his or her business. For example for chicken inn, some of its suppliers could be a broiler company(supplying with chicken, the electricity company supplies with electricity.
Supplier Defined
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Broiler as a Supplier
Chicken Inn Logo Chicken Inn Suppliers
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Supplier Selection Definition• Supplier Selection: “The stage in the buying process when
the intending buyer chooses the preferred supplier or suppliers from those qualified as suitable.” (Westburn Dictionary)
• Sherry Gordon (2008) states that supplier evaluation is also a process applied to current suppliers in order to measure, monitor their performance for the purposes of reducing costs, mitigating risk and driving continuous improvement. Thus one can then argue that supplier evaluation is a comprehensive model used to minimize the risk associated with quality and delivery
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• Why is supplier selection so important to your organization?
• What can result to your company by having the incorrect supplier?
• What is important to you when finding a supplier?
Brainstorming Exercise
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APPROACHES TO SUPPLIER EVALUATION
• CONFERENCE ROOMS• SITE VISITS• USING THIRD PARTY EVALUATORS
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Conference rooms
Face to face discussion can help clarify specifications and determine whether a supplier can meet the demands of a complex purchase
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Site visits
Many suppliers look good on paper, but visiting a site can help determine whether there are inefficiencies
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Third Party Evaluators
Trained third party organisations are often hired to evaluate and audit suppliers Resource intensive• Requires trained personnel• Involves surveys
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Importance of Supplier Evaluation in Business
Increase Performance Visibility
When companies do not know the facts about their suppliers, supplier management tend to be based on guesses. evaluating suppliers helps to improve performance and meet the goals of the organisation thus increasing the performance visibility.
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Mitigate Risk• Insight into supplier performance and business
practices helps to reduce business risks. Those risks can be financial or operational
Align Customer & Supplier Business Practices
• Suppliers should run their business in alignment with their customers, they can share same business ethic and expect similar standards of excellence as well as showing commitment to continuous improvement.
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Supplier Evaluation Selection Criteria
• Competitive pricing • Ability to meet specifications and standards • Product and service quality • Product yields and durability (food)
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Ray Carter’s Key to Successful Evaluation
Ray Carter director of DPSS Consultants
first outlined his seven Cs of supplier evaluation in a 1995
article in ‘purchasing and
supply management’ and later added new Cs
to the model.www.google.co.zw/imgres?imgurl
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Carter’s 10 C’s of Supplier Selection
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• Competency• Capacity• Consistency• Control of Process• Cost/Price
• Commitment to Quality
• Cash/Finances• Clean• Culture & Relationships• Communication
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Competency
• Looking at how competent the supplier is, in what they do? • Do they possess the needed skills i.e.
Building Project, Accounting and Auditing • Supplier's capabilities measured
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Capacity• The supplier needs to have enough
capacity to handle your firm's requirements. • Does it have the resources to meet
your needs, particularly when commitments to other clients are considered?
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Consistency• Expect the supplier to deliver exactly
what you want every time. If it is not exactly what you want, it should be exactly what you require. • The supplier needs to be consistent
with timing and quality issues.
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Control of Process• Query how much control this supplier has
over its policies, processes, procedures, and supply chain.
• How will it ensure that it delivers consistently and reliably, particularly if it relies on scarce resources, and particularly if these are controlled by another organization?
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Cost/Price• It is vital to look at the cost of the product that this
supplier provides. • How does product compare with the other firms that
you're considering?• Most people consider cost to be a key factor when
choosing a supplier. However, cost is in the middle of the 10 Cs list for a reason:
• Other factors, such as a commitment to quality and financial health, can potentially affect your business much more than cost alone, particularly if you will be relying on the supplier on an on-going basis.
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‘’Quality means doing it right even if nobody is looking’’ Henry Ford
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Commitment to Quality
• The supplier needs to provide evidence that it's committed to high quality standards. Where appropriate, look for quality initiatives within the organization, such as ISO 9001, SAZ and Six Sigma .
• The supplier also needs to show that it is committed to your Company, as a customer, for the duration of the time that you expect to work together. (This is particularly important if you're planning a long-term relationship with the supplier.)
• You'll need evidence of its on-going commitment to delivering to your requirements, whatever the needs of its other customers.
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Look at what happened at Nandos building in Bulawayo btwn 7th & 8th Jason Moyo
This has led to speculations on the quality of workmanship as well as health and safety concerns ~To all StakeholdersInvolved.
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Cash/finances Read the Supplier’s financial reports,
look deeper than the numbers.
Your supplier should be in good financial health. Cash-positive firms are in a much better position to weather the ups and downs of any uncertain economy.
Does this supplier have plenty of cash at hand, or is it overextended financially? And what information can the supplier offer to demonstrate its on-going financial strength?
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CLEAN
• Make sure that their buildings and products are clean and sanitary.
• By clean; Carter means that you want to make sure that the products the supplier uses are not controversial, dangerous, or tampered with in any way.
• For example, if you are Nike and you are having a company make your shoes you will want to make sure you are not using sweat shops somewhere along the supply chain. If you are a toy company and you buy your toys from China you will want to make sure that the toys are not painted with lead paint.
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Comparison or two Suppliers in the Beef Industry
Dirty Environment Clean and up to Standard
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Culture and Relationships
• The best business relationships are based on closely matching workplace core values . This is why looking at the supplier's business culture is important. For example, what if your organization's most important value is quality, and your main supplier cares more about meeting deadlines? This mismatch could mean that it's willing to cut corners in a way that could prove to be unacceptable to you.
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Communication• This goes a lot with culture and relationships. • It actually goes well with the other 9 C’s. • Does the supplier have the technology to stay
in communication with you? • How does the supplier communicate? • How often does the supplier communicate? • Are they willing to give proprietary
information?
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In short we are sayingIf you use Ray Carter’s Key to Successful Evaluation you will never go wrong
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Real Life Examples
• How companies or organisations deal when buying • Pertaining to big projects or day
to day buying by companies and organisation
In Short
• For Day to day Orders i.e. Stationary & Cleaning material, in a formal organisation the buyer is required to request from three (3) reputable suppliers.
• A quotation from the supplier, a price list, samples of products for testing if there are there.
• After choosing the one appropriate supplier follows all types of trading letters.
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Where it Involves a Tender/Bids• An invitation to tender must be published
depending on weather its open or advertised to all vendors or contracts, then there are restricted tenders to selected prequalified vendors or contractors
• Notice and Invite is at least 30-35 day calendar, no longer than 12 months. 15 calendar days if a Prior Information Notice (PIN).
• A tender must be enclosed in a double envelope system.
• Shortlisting for suitable vendors starts after the selection criteria.
• Their sales pitch.
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BONUS
• Our Bonus in Conclusion Outside Carter 10Cs is about:• ETHICS: What is right and good or wrong and bad in any given
situation” (Northhouse P.G. (2013). • Ethics – are the moral principles governing or influencing
conduct. In Zimbabwe there is the Chartered Institute of Procurement and Supply (CIPS) code of conduct for reference.
• It involves principles such as fairness, trust integrity, honesty, cultural respect, and transparency – upholding the Organisation’s standards and policies and all relevant legislation. Buyers and Suppliers have to know their code of conduct and practice it (implement it).
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REFERENCESAll information used for this presentation is based from information from the following sources:• Fuller, Neil. “How Many C’s in Partner?” All Business. Supply Management, 8 Sept. 2005. Web. 5 April 2010.• Hadaway, Jordon. “Supplier Selection.” 12Manage The Executive Fast Track. 12Manage. 6 January 2010. Web.
7 April 2010.• “Home: Sourcing Platform MFG.com Launches India Operations.” NetIndian, 3 April 2010. Web. 8 April 2010.*** Photos, pictures, diagrams were adapted from• https://www.google.co.zw/search.pictures• https://www.google.co.zw/imgres?imgurl• Ray Carter, Practical Procurement", "Practical Contract Management" and "Stores and Distribution
Management" and creator of the 10 (c) model.• © iStockphotovm• “Supplier.” Business Dictionary. Online Business Dictionary, 2010. Web. 5 April 2010.• “Supplier Selection.” Westburn Publishers. The Westburn Dictionary of Marketing, 2002. Web. 5 April 2010.• Oxenbury, Alan. “Making the Right Choice.” Supply Management. Supply Management, 20 July 2006. Web. 6
April 2010.• Oxenbury, Alan. “The Final Countdown.” Supply Management. Supply Management, 3 August 2006. Web. 6
April 2010.• Wallin, Cynthia. “Supplier Selection.” Brigham Young University. Microsoft PowerPoint file. 9 February 2010.
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PRESENTED BYSinqobile Ndebele L013-0961R
&Sibonginkosi Ndhlovu L013- 1354J
2 March 2017