SUPPLIER EVALUATION CRITERIA

 Evaluation of potential Suppliers:

After a list of possible supplier has been compiled, the problem arises, of selecting one. There are various factors that go up to make a right supplier and all these factors have to be evaluated with reference to the buyers need before the supplier is finally selected. Some of the main considerations that have to be taken into account are as follows:  

1.      Internal facility: supplier adequate facilities? Will he be able to supply you all your requirements in time produce goods of the quality required by you? Has adequate quality control and testing facilities? Has he qualified and experienced people take charge office production? These are the basic questions to be asked during the evaluation of a supplier.

2.      Financial adequacy and stability: during the supplier evaluation process, financial stability must be checked and evaluated. Below questions must be checked. What is his financial status? Is it solvent or is he in financial difficulties? If he is in financial difficulties, he might not be able to procure your raw material and consequently his production might get affected. There by adversely affecting the supplies. What is his reputation in market or with his bankers?

3.      Outlook: outlook of any Organization matters most. This is the first impression which will show the maturity of the supplier. Has he modern Outlook and is he interested in improving his product by using modern technique like value analysis? What about the technology that he employs? What is his attitude to improvement of Technology? Does he have an efficient management to run the company? Has he and R&D facility? The answers to this entire question I will help the buyer to get an insight about the management approach toward development and will help to decide whether to go with it or not.

4.      Reputation: market reputation is one of the most important aspects to select supplier. The market will let you know whether it is a good decision to go with this supplier or not. Below questions must be asked. What is his reputation in the market in regard to quality, price, and promises of delivery dates etc. does he keep his words or is he the type who will ignore you if an item produced for you can be sold in the market for higher price?

5.      After Sales Service: how is after Sales Service? This is one of the most critical things to be considered. The sales and service are sometime even more important than the delivery of the product. Does he have maintenance engineer or after-sales service staff in the town where you are located? How good is he in providing the after Sales Service? What is his reputation regarding the service?

6.      Location: the location of the supplier is also very important because this will help to manage the supplier easily. The nearer the supplier it is easy to communicate, visit the supplier. It will also help reduction in logistics cost and Management. Moreover, this will help to reduce the inventory also.

7.      Industrial relationships: during the evaluation of any supplier the buyer must check the industrial relationship of that supplier. What is the labor relation like in his factory? If there is any industrial strife and frequent strike or lay-offs? This will seriously affect his supplies. One has to be very careful in dealing with such companies.

8.     Manufacturer or Agent:  Is he a direct manufacturer or only an agent? Question may arise to whether the buyer should purchase from manufacturer directly or his agent, or from the stockiest or wholesaler or retailer. Usually the middleman offers services which the manufacturer may not be in position to give. Though it may look as purchasing directly purchase from the manufacturer it is cheaper, it might not be really so when one considers the overall financial gain that one may get by way of service facility. In many cases, manufacturer who have agent, might not give the discount that they offer to their agents. Often the stockiest are available locally while the manufacturer maybe far away.

 The purchaser must always be conscious of the fact that there are always possibilities obtaining better sources of supply. Better sources in this context means, competitive rates, better quality, better service etc. continuous efforts must therefore be made to seek and find out such better sources.

When choosing between one supplier and another, comparison may be mark in regard to the aspects of below competitions.

1.      Technological competition that is technical quality of the product its versatility, dependability reliability etc.

2.      Service competition the after Sales Service that the manufacturer or supplier is able to render. This will include various guarantee or warranty attached to the product.

3.      Price competition.

4.      Fourth type of competition which is fast developing is time based competition that is the response time of delivery.

 

Stages of Supplier evaluation:

 After the evaluation of potential suppliers, there are some stages which should be followed for further evaluation or selection of supplier. These are:

1.      Survey stage: the survey stage is the initial stage of evaluation. All possible sources are explode and their capabilities are evaluated on the basis of prima facie of information either supplied by the vendor himself or through advertisements, catalog social action or through Barbie game advertisements catalogs brochure etc. a list is drawn up of those who have to be investigated further. Many companies keep our list of approved suppliers. A vendor wishing to be considered for such registration has to apply in a specific form through internet or in hardcopy.

2.      Enquiry stage: detailed analysis has to be made, after obtaining as much relevant information as is necessary. The vendor may be asked to furnish information in a standard enquiry form and this may be followed by a plant visit if necessary. Enquiries may be made of his present customer regarding his performance.

3.      Negotiation and selection: the enquiry stage may reveal that quite a few of those considered at the survey stage do not come up to the Expectations. Those vendors who pass the enquiry stage main fruitfully be called for negotiations discuss business possibilities and clarify various terms like credit, quantity discount, quality control procedures etc. Finally the list of approved on selected vendor is drawn up.

4.      Experience stage: at this stage the buyer evaluates the performance of the vendor. There is a feeling in the mind of many people that the objective of supplier evaluation is the good from the bad and throws out the bad. But this is not true. Objective is improving the performance of a vendor in the areas in which they are deficient such as safety quality delivery and cost. The idea is to correct their faults and improve their performance

 

In the above article, we have discussed in details about the procedure supplier evaluation and the different stages of this evaluation. One must apply his practical knowledge and experience do the detailed analysis during this evaluation process. Last but not the least, now a days, organizations are accepting windows as their partner and therefore the development improvement of the partners are also important along with the growth of the organization.