MNP2601 – Study unit 5 – Assessment and Selection o f suppliers
Characteristics of a good Supplier
Criteria for Supplier selection
1. Quality and Quality accreditations.
- This influences productivity and leads to fewer interruptions
- Many large organisations require suppliers to be ISO 14001 certified
2. Price, Cost and structure
- Suppliers are entitled to fair price
- Information is valuable as it helps in determining efficiency and mark-up on prices to
determine if prices are reasonable.
3. Delivery.
- Important because organisations are moving towards demand pull for products and
services.
- Important because there is a pressure to reduce inventories and this leads to more
frequent deliveries.
4. Time
- Speed of response is Important as it reduces lead time.
- Suppliers should analyse and reduce cycle times through time mapping
5. Flexibility
- Refers to how quickly a supplier can adjust to a change in demand esp[ecially for
intergrated supply chain.
- Can be flexible with regards to : Volume, variety, mix and New products.
6. Service
- Combination of the above criteria. Important for repeat customers.
- Includes suppliers attitude towards consignment and “supplier managed Inventories”
7. Financial status
- Important to determine financial health or condition of supplier.
- Financially stable suppliers reduce risks
- Obtain info from Credit bureaus
8. Systems: Operations, planning and control and e-commerce
- Important to know how suppliers plan schedule and control operations.
- Electronic communications are important due to technological innovations.
9. Technology and process capabilities
- Here you will look at the following: Ability to meet future demand, design capabilities
and innovation and the ability to meet more demanding specifications.
10. Supply chain management
- Should be looked at a a separate criteria and consideration should be given to:
Suppliers propsed position and role in the supply chain.
Suppliers awareness of SCM concepts
Suppliers transport and distribution
Characteristics of a good Supplier
Criteria for Supplier selection
1. Quality and Quality accreditations.
- This influences productivity and leads to fewer interruptions
- Many large organisations require suppliers to be ISO 14001 certified
2. Price, Cost and structure
- Suppliers are entitled to fair price
- Information is valuable as it helps in determining efficiency and mark-up on prices to
determine if prices are reasonable.
3. Delivery.
- Important because organisations are moving towards demand pull for products and
services.
- Important because there is a pressure to reduce inventories and this leads to more
frequent deliveries.
4. Time
- Speed of response is Important as it reduces lead time.
- Suppliers should analyse and reduce cycle times through time mapping
5. Flexibility
- Refers to how quickly a supplier can adjust to a change in demand esp[ecially for
intergrated supply chain.
- Can be flexible with regards to : Volume, variety, mix and New products.
6. Service
- Combination of the above criteria. Important for repeat customers.
- Includes suppliers attitude towards consignment and “supplier managed Inventories”
7. Financial status
- Important to determine financial health or condition of supplier.
- Financially stable suppliers reduce risks
- Obtain info from Credit bureaus
8. Systems: Operations, planning and control and e-commerce
- Important to know how suppliers plan schedule and control operations.
- Electronic communications are important due to technological innovations.
9. Technology and process capabilities
- Here you will look at the following: Ability to meet future demand, design capabilities
and innovation and the ability to meet more demanding specifications.
10. Supply chain management
- Should be looked at a a separate criteria and consideration should be given to:
Suppliers propsed position and role in the supply chain.
Suppliers awareness of SCM concepts
Suppliers transport and distribution
