Answer to Question #267092 in Management for Sibabalwe

Question

Discuss the possible ways that purchasing become aware of the need to evaluate and select a supplier

Answer 1

Discussion

It is the responsibility of purchasing department to choose the correct suppliers to purchase the required products for their company. Thus, supplier evaluation technique is essential for purchase manager’s point of view to choose the best supplier among available suppliers. Supplier evaluation and selection is one of the key organizational functions needed for successful business growth and development. It is critical, therefore, that the procurement professional implements effective processes for qualifying suppliers and determining the award of business.

The Procurement Department is expected to lead the process of evaluating competitive offers and selecting the supplier for any particular contract. The methods used for selection are some of the most important elements of the procurement professional’s skill set. To produce a specific result, one must choose the correct mechanism and appropriate sourcing tools. The supplier is the fundamental resource employed by any organization to meet its requirements. If the supplier is not selected correctly, an organization will never achieve satisfactory results. Therefore, proper supplier selection, despite requiring a strong measure of distinctly human intuition, must be performed systematically and to the most objective criteria. Below are some most important things for purchasing team to keep in mind when evaluating and selecting a supplier;

• Total Cost of Ownership- Strategic sourcing and direct procurement teams realize that the price of a component or service does not always indicate the total cost for a company device. Other factors such as transportation, logistics and product quality can contribute to the total cost of ownership.
• Product Quality- Product quality goes hand-in-hand with total cost of ownership, and it is no surprise that product quality is a major factor to consider when selecting a supplier. For instance, medical devices must be compliant with regulations to ensure safety and effectiveness.
• Supplier Capabilities- Ensuring that a supplier can actually do what they claim can save lots of time and headaches down the road. Additionally, companies can expand their partnerships with suppliers to leverage other capabilities and expertise the supplier may have.
• Consistency- Evaluating a supplier’s consistency is another best practice used by industry experts. It is important to evaluate if the supplier will deliver the same results every time.
• Risk- With the changes to ISO 13485 focusing heavily on Risk Management, this is a critical factor to consider when selecting a partner. Strategic sourcing and direct procurement executives recognize the importance of identifying and mitigating potential risks in a supplier partnership.

Reference

Kurpjuweit, S., Wagner, S. M., & Choi, T. Y. (2021). Selecting startups as suppliers: A typology of supplier selection archetypes. Journal of Supply Chain Management, 57(3), 25-49.