Question

Obviously, it is important to know which suppliers are good and which are bad. There are many ways companies attempt to develop & maintain this knowledge. Some ways are easy to develop and use, others are hard.

1) Give an example of at least 3 different ways you could attempt to measure whether a vendor is good or bad.

2) Under what circumstances would you prefer each approach?

Answer 1

1.

The first way of measure is the regular delivery of goods that meet the specifications and quality characteristics of the  goods prescribed by the company. If it is done on a consistent basis, then the vendor is good and it is reliable. The second way of measure is the consistency in delivery of goods by the vendors so that firm can deploy advanced methods such as JIT inventory management in the organization. Hence, reliability upon the vendors in terms of delivery of goods without a miss, is a very important and good characteristics. The third way to measure and safe working conditions and ethical policies by the vendors as prescribed by the company, is used to check the goodness of the vendor. A company never wants to associate a vendor that exploits its workers, or uses unethical means. Companies like Apple and Starbucks make it a very strong criteria to become a vendor for them.

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2.

When there is a need of input agricultural raw materials, with specifications, then first criteria or measure is used to evaluate the vendors.  When there is a need to implement just in time quality system in the organization, then second measure is used because JIT fails if vendors are inconsistent or vendors lack reliability. When there is a need of sustainability drive across the value chain, then third measure is used, because vendors should use ethical means, standard and safe working conditions and protective towards the environment. So, these measures establish the vendors to be good or bad on the basis of it and companies use it for the vendors.