Essay Sample on Supplier Evaluation and Selection

Introduction

The process of supplier evaluation and selection is an important component in an organization. Suppliers are crucial to the supply chain as they provide products and services that are of high standard. Evaluation and selection of suppliers benefit both the customer and the supplier by getting rid of hidden costs in the supply chain. As seen in the discussion of this essay, there are the various aspects of supplier evaluation and selection appropriate for the success of businesses.

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Companies evaluate suppliers before making a final decision for various reasons by spending resources and time. Evaluation is done because products and services rendered by suppliers vary over some time (Olivares and ElMaraghy 56). The quality of services often seems to deteriorate over a while. Besides, there are multiple suppliers in the market and organizations must choose the best service providers. Firms will spend money and time in selecting a supplier who can provide and deliver products that are of value. Also, a supplier must be able to meet quantity demands and time requirements efficiently.

Purchasers have both distributors and manufacturers in their supply base because it is necessary for various reasons. Firstly, manufacturers have the lowest unit price as there are no transaction charges. However, most manufacturers cannot deal with the enormous volumes of transactions necessary to sell directly. According to Kim and Kim (2015), distributors become essential for purchasers in their supply chain as they can handle the large volumes of the transaction (46). Secondly, an integrated system of management from manufacturers allows the improvement of services and stocks performance at distribution levels thereby maintaining stability at the supply chains. The third reason is that manufacturers transfer knowledge about their products to distributors and impact supply chain performance. Additionally, manufacturers get useful information about markets from distributors. Information obtained from distributors will help in getting quality products that satisfy customer expectations and meet the demands of the market (Manello and Calabrese 71). Last of all, purchasers may need additional services from their suppliers that manufacturers cannot fulfill. The distributors then step in to meet these other services.

Buyers can get information about potential suppliers from various sources that will help them make informed decisions. Data is obtained from sales representatives who can give accurate data about capacity and time requirements for products and services. Also, information can be achieved through current and existing suppliers. Buyers can interact with current and existing suppliers and find out about the quality of products and services (Yasemin 52). Besides, buyers can source information from social media and internet searches. Buyers can look at people's reviews about products and services before making up their minds.

Supplier-managed inventory and integrated supplier programs are becoming more popular with buyers for many reasons. When selecting a supplier, a buyer must ensure that market expectations are attainable and the supply chain performance sustained (Maryam et al. 185). Firstly, many manufacturers of original products cannot handle the vast volumes of proceedings needed to sell directly. An integrated system, therefore, helps deal with these enormous undertakings that enhance direct selling and reduce extra costs. Secondly, integrated suppliers are given access to the purchasers demand information and are required to maintain a specific level of inventory (Manello and Calabrese 60). With this knowledge, the integrated supplier maintains customer service on the agreed product. Lastly, an integrated supply program enables buyers who more services from their suppliers need still get these additional services.

There are essential indicators during and after a supplier visit that helps in determining whether a company is capable of becoming a best in class supplier. Supplier visits often entail site walks and plant surveys. A quality supplier must be accountable and be ready to take responsibility as far as quality issues are concerned (Kumar 659). Also, a good supplier must be able to meet and prove production capability efficiently. Besides, a good supplier must be able to cooperate with all parties with an ease of communication.

There are three essential types of sourcing for suppliers, and each has its advantages and disadvantages. All these sources must be analyzed before making a final choice (Merzifonluoglu 51). Firstly, there is the sole sourcing, which is a form of an agreement entered into without going through a competitive process. Sole sourcing happens in instances where there is only one known existing supplier who can supply the needed products. The main advantage of sole sourcing is that the supplier is an established and known supplier. The supplier can be relied upon to deliver and on accountability matters on issues to deal with the quality of the products (Kanokporn 18). The disadvantage with sole sourcing is that the supplier has established a monopoly giving the buyer less bargaining power.

Secondly, there is single sourcing, which is different from sole sourcing because of choice. Single sourcing is when a thorough analysis is made from different suppliers and choosing one specific vendor (Kim and Kim 5). The benefit of single sourcing is that a buyer has unlimited options to pick from. And choices give the buyer options to pick a supplier who can deliver quality products. Also, it provides the buyer with bargaining power unlike in sole sourcing. The disadvantage with single supply is that once a supplier is picked, they can fail to meet expectations. Services and products delivered by suppliers vary and deteriorate with time and this can cause unnecessary costs for the buyer. Lastly, there is multiple sourcing, where an organization makes use of multiple suppliers for various products and services. The advantage of multiple supplies is that a buyer has choices that can meet different market expectations (Nejma et al. 101). The downside of multiple sourcing is poor quality products and extra costs because of the various suppliers for different products.

The risks involved with these forms of sourcing must be weighed before a final decision can be made. As per Kumar (2015), the biggest threat with sole sourcing is the likelihood of supply interruptions especially for specific products which can leave a buyer helpless (222). Disruption in the supply can significantly affect the supply chain. The danger with single sourcing is the great reliance between the buyer and the seller. This over-reliance can lead to a strained relationship that can impact on the quality of products. With multiple sourcing, organizations have to deal with higher costs as they are dealing with many suppliers. Also, the variety of products is likely to be compromised as keeping up with checking the different suppliers is not easy. Buyers must thoroughly analyze all these sources; their advantages and disadvantages (Manello and Calabrese 74). Once a thorough analysis is made, final appropriate decision can be made.

Suppliers occasionally decline to share cost information with buyers particularly when their relationship is new. Lack of trust is one of the reasons why suppliers do not share information. Trusting someone new is hard and especially in matters business is even harder. A supplier also may not have a comprehensive grasp of its own costs due to a lack of a good accounting system (Kim and Kim 5). Such suppliers are at a loss to give overhead costs to products. In addition other suppliers fear that disclosure of cost information may impact their pricing strategy.

To manage risks in the supply chain, as the chief purchasing officer at a manufacturer of mobile cellular devices, I will consider various aspects. Firstly, I will develop an overall process framework that is tied to outcomes (Kumar 660). I will point out the potential risks with mobile devices like fake phones and product infringement and the consequences. From the identified risks I will come up with a strategy to curb the risks and then implement the plan. Secondly, I will thoroughly outline the suppliers; check their data on regulatory compliance, integrity and their production capabilities (Maryam et al. 185). Lastly, I will communicate and cooperate with all the team involved in the supply base to avoid frustrations and unmet expectations.

When evaluating whether a supplier is a candidate for a longer term relationship, several factors must be considered. A good supplier must have excellent communication and be readily available (Kanokporn 66). This factor should be established from the start to avoid unnecessary frustrations. Where a supplier has quality products but poor communications, a buyer must weigh the consequences of engaging such a supplier. A good supplier must be competent enough to deliver products as per the requirements and on time, efficiently (Merzifonluoglu 51)..Also, a good supplier must be capable to meet production capacity to avoid shortages in the supply chain. Besides, a good supplier must be consistent in the supply of the contracted products.

Sustainability in any business is essential as it takes into consideration making and giving a better life for today and future generations. A sustainable supply chain goes beyond logistical networks and considers other factors like environment (Nejma et al. 101). In matters supply, sustainability bounds the whole supply chain from manufacturers, suppliers and the final consumers. Sustainability includes not only environmental issues but social and economic aspects as well. Organizations and businesses are striving to run in a manner that is sustainable for future generations. In matters environment, organizations are being operated in a way that is environment-friendly. Products made today undergo an environmental impact assessment to determine their impact on the environment. Delivery and supply of products and services too have to undergo a thorough analysis of their environmental impact (Kanokporn 19). Today most companies are going green to reduce the effects on an already damaged environment.

Regarding the social aspects, organizations today must take into considerations the well being of their employees. The well being of employees involves not only their financial needs but the mental and physical well being too (Olivares and ElMaraghy 56). In matters economic, organizations have to ensure that their businesses are adding value and boosting the economic aspects.

From the above facts, it is clear that supply evaluation and selection is indeed a process that requires resources and time. Before settling on a final supplier, in addition to the above factors, there are three essential considerations that a buyer should look in to (Kumar 659). Firstly, a supplier must have a process and design potential. A good supplier must have a modern and capable product with appropriate technologies needed in today's world. The world is changing, and with the advanced technologies, suppliers must be able to incorporate these aspects into their products. Secondly, a good supplier must combine both reliability and quality. Today's customers are enlightened and informed than ten years ago and are looking for quality products. Product quality should consistently meet the expectations and requirements of the end consumers. Lastly, a good supplier should seek to build long term relationships. Creating potential long term relationships requires agreement and collaboration between suppliers, manufacturers, and distributors. Longer term relationships are also a key ingredient as they will later help in sharing of costs (Merzifonluoglu 51). A...