Question

Sourcing has a very important role in the supply chain and one of the most important thing is the Supplier related Issues. Please write at least 3-5 paragraphs about selecting and evaluating suppliers, and how important is that for a business, and how it effect the business. Also, list some examples about some businesses.

Answer 1

Supplier selection and evaluation are done in a systematic and scientific manner to ensure value for money, good quality, reliability, and service. The importance and weight age of the factors will define the business priorities and strategies.

The steps to identify, evaluate, and choose the supplier are as follows:

1. Strategically plan and think when selecting a supplier: The most suitable supplier will be who matches or exceeds your business needs. For example, if on-time delivery and fast turnaround are critical for your business you would give that factor more weight age and select a supplier accordingly. In a QSR fresh and regular deliveries by the supplier are critical, hence quality and efficiency of delivery will be the deciding parameter. You also need to determine how many suppliers are required to give him and you good value of returns from your business and give you the benefits of getting good quality and quick responses. A balance has to be acquired between exclusive suppliers and having alternative supply arrangements.
2. Qualities of a good supplier: The qualities required in a good supplier are Reliability, quality, value for money, excellent service, and good communication. He should also have a sound financial background. Value for money does not mean the least expensive but a good product at a great price clubbed with excellent service. The supplier should also follow a partnership approach where he is treating your business well and providing good service as required.
3. Identifying potential supplier: You can get a list of suppliers from business directories, trade events, trade advisors, exhibitions etc.
4. Drawing up a list of suppliers: You can shortlist and determine the suitable supplier based on their ability to deliver, financial capabilities, number of years in business, list of their current customers, are they recommended by key business houses and their current business with government and other bodies. The shortlist should be 2-3 relevant suppliers.
5. Choosing a supplier: once shortlisted you can request for a sample according to your specifications and start discussing business terms as follows:

• Get a quote
• Negotiate delivery and payment terms
• Plan a visit to the supplier's facility
• Ensure he will perform the task and not subcontract
• Match your ethical and moral understanding of labor practices and child labor laws.
• Ensure his licenses and documents are according to rules, regulation, and the local laws.

Some examples of problems in business and the critical need to analyze and evaluate supplier accurately are as follows:

• The quality of chicken and meat supplied and of which quality will determine the quality of the burger served at the QSR.
• Further automobile components if not matching the quality parameters can create conditions for product recall costing companies billions of dollars and a loss of reputations. It has happened to a Japanese Automobile manufacturer in The US
• A key smartphone company was under fire because of nonadherence of labor laws by a supplier.
• A recent short-term closure of a QSR chain because of logistics collaborates weakness.

To sum it up an efficient supplier is the key to an efficient product; the suppliers should have a good background with great potential for growth and ready to adapt to meet your changing market requirements.