business to business mba mg university

1. Supplier evaluation
• Supplier evaluation refers to the process of evaluating an
approving potential supplier by quantitative assessment.
• Objective
 Reduce risk.
 Maximize value to the buyer.

2. Scenario requiring supplier evaluation
During new product development.
Due to poor existing supplier performance.
At the end of existing contract.
Buying new equipment.
Expanding into new market.
Current supplier have insufficient capacity.

3. Supplier evaluation process
Recognize the need of supplier selection.
Identify key sourcing requirement.
Determine sourcing strategy.
Identify potential supply sources.
Limit supplier in selection pool.
Determine method of supplier evaluation.
Select supplier and reach agreement.

4. Factors considered in sources of supply
Quality of material.
Quantity of input variable.
Price of input.
Time of delivery.
Location of supplier.
Reputation of supplier.
After sales services.

5. Method of evaluating supplier
performance
1. Categorical method.
the categorical method involves categorizing each supplier
performance in specific areas defined by a list of relevant
performance variable.
The buyer develop a list of performance factors for each supplier
and keep track of each areas by assigning a grade in simple terms
such as “good”, “neutral”, “unsatisfactory”.

6. Advantages
• Easy to implement.
• Requires minimal data.
• Low cost system.
• Good for firms with limited resources.

7. Weighted point method
• The organization assign weight to different evaluation criteria.
• Any number of evaluative factors may be included.
• Depends on weightage ,performance index are generated.
advantages
Flexible system.
Allows supplier ranking.
Combination of qualitative and quantitative factors into a single
system.