Supplier Evaluation

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Supplier Evaluation by Mind Map: Supplier Evaluation

1. Goal of Supplier Evaluation

1.1. Identify the qualification and behaviour of the suppliers.

1.2. Finding the best which understand the need and expectation

1.3. Evaluate the performance and capacity of the suppliers so that their limitation and boundaries can be known.

1.4. Get the active participants who quickly takes action on any issues.

1.5. Reduce sourcing risk and maximizing value to the buyer.

1.6. Improve price, quality and delivery of the products.

1.7. Effective operation and profitability of the company.

1.8. Finding best supplier with quality i.e. SMART (specific, measurable, attainable, relevant and timely) in order to achieve the target.

1.9. Know the suppliers previous background, their success ratio etc.

2. Criteria of Evaluation

2.1. Definition

2.1.1. Proper analysis is always needed for evaluation so as Suppliers. Different criteria are to be considered for proper evaluation of suppliers.

2.2. Criteria

2.2.1. Quality

2.2.1.1. It is a competitive tool that gives company a plus point. Quality failure often effects company financial and non financially.

2.2.2. Delivery

2.2.2.1. The basic character can be seen during delivery. Right quantity of product delivery at agreed time increases the good will of a supplier.

2.2.3. Service

2.2.3.1. The goal of service is to fulfil the needs and wants of customers. In accordance to that quick response, easy business, following customer's instruction are some of the service to be followed.

2.2.4. Price

2.2.4.1. Different kind of prices should be evaluated. Such as purchasing cost, transportation cost, direct cost and other costs. Lowest should be choosen.

2.2.5. Time

2.2.5.1. The expire time from order being placed should be considered.

2.2.6. Technical ability

2.2.6.1. Modern technology, equipment and ability to follow the development.

2.2.7. Production Capability

2.2.7.1. Ability cope with the situation of increase and decrease of order.

3. Evaluation Methods

3.1. Survey and questionnaires

3.1.1. It is the way of collecting information through asking questions and interviewing on the current status of the suppliers. For instance: Quality survey, supplier survey.

3.2. Scorecard

3.2.1. Common way used to know about different information on suppliers in one methods.

3.3. Sites

3.3.1. Visiting sites of suppliers and grabbing information.

3.4. Cost-Ratio method

3.4.1. Evaluating customer through cost analysis

3.5. Categorical method

3.5.1. Analysing different suppliers in different categories.

4. Evaluation Strategy

4.1. Defination

4.2. Classify different suppliers and examine in different level based on their quality.

4.3. Create the evaluating method which may include certain evaluation form, surveys, metrics or any sorts of application.

4.4. Create the indicator of the activity of the supplier and analyse their performance

4.5. Types of Evaluation Strategies

4.5.1. Categorical method

4.5.1.1. Create list of performance and evaluate with grade as good, neutral, unsatisfactory.

4.5.1.2. The suppliers get informed about their performance in the meetings

4.5.2. Cost ratio method

4.5.2.1. Evaluate performance by standard cost analysis system.

4.5.2.2. Five factors such as quality (30), technology (20), price (15), delivery (25) and service (10).

4.5.2.3. The point achieved gets deducted from 100 and divided by 100 and added 1 on it.

4.5.3. Linear averaging method

4.5.3.1. Common method

4.5.3.2. Specific quantitative activities are used for evaluation procedure.

4.5.3.3. Weight is allocated to every factor such as quality, service and price and the weight received are further multiplied with the individual rating separately and compared.

5. Defination

5.1. It is process of evaluating prefect supplier for one's business through detail analysis. It asses to find the best among the good.

6. List of References:

6.1. Website of Helpsap, 2016. Retrieved from: https://help.sap.com/saphelp_erp60_sp/helpdata/en/ac/e1b853dcfcb44ce10000000a174cb4/frameset.htm

6.2. Website of INC. Retrieved from: http://www.inc.com/guides/2010/12/7-tips-to-rate-and-evaluate-your-suppliers-and-vendors.html

6.3. Website of Cips. Retrieved from: https://www.cips.org/Documents/Knowledge/Procurement-Topics-and-Skills/9-Supplier-Bid-Tender-Evaluation/Supplier-Evaluation-and-Appraisal/POP-Monitoring_the_Performance_of_Suppliers.pdf

7. Prepared by: Ajeet Lowagun B K and Sagar shah