This document discusses developing a balanced supplier scorecard. It begins with an introduction to supplier scorecards and balanced scorecards. It then reviews literature on supplier evaluation models and criteria. Two case studies on Honeywell and Tara Aerospace's supplier scorecards are presented. The document proposes a balanced supplier scorecard with four perspectives: financial, customer, internal processes, and innovation/learning. It identifies shortcomings in current scorecards and suggests enhancements like including environmental and social factors. The conclusion emphasizes that effective scorecards should be flexible, updated in real-time, cost-based, and benchmarked.

1. DEVELOPING A
SUPPLIER
SCORECARD
PRESENTED BY
GROUP 1
ANAND KV - DM14105
KARTHICK S - DM14123
ANAND NAMBIAR - DM14202
VIJAY KRISHNAN A - DM14257

2. CONTENTS
Introduction
Literature Review
Case Study 1: Honeywell
Case Study 2: TARA
Developing a Scorecard
Conclusion

3. INTRODUCTIONIntroduction
Literature Review
Case Study 1:
Honeywell
Case Study 2:
TARA
Developing a
Scorecard
Conclusion
Challenge for organizations - Improving supplier performance
Suppliers: Key value chain participants – affect the firm’s total
performance
Balanced Scorecard
- performance measurement tool
- strategic tool for decision making based
on performance
- based on 4 perspectives – Customer,
Internal, innovation & learning, Financial
Supplier Scorecard
- measure performance of suppliers
- quantitative & qualitative
- template to identify supplier performance
metrics & evaluate the suppliers
against these key metrics
C o n t
e n t s

4. SUPPLIER SELECTION CRITERIA
Dickson (1966)
273Purchasing agents
23selection criteria
Classification of Extreme,
Considerable, Average, Slight
Order  Quality, Delivery,
Performance, Warranty
Weber (1991)
Analysis of 74articles
Based on Dickson’s 23
Importance assigned based on
frequency of usage
Order  Net Price, Delivery,
Quantity
Introduction
Literature
Review
Case Study 1:
Honeywell
Case Study 2:
TARA
Developing a
Scorecard
Conclusion
C o n t
e n t s

5. SUPPLIER SELECTION CRITERIA
Ellram (1990)
Qualitative Criteria
Long Term Relationship
Soft Factors
Four Groups  Finance,
Organizational Culture, Strategy,
Technology, Misc
Krause (2001)
New dimension
Competitiveness & Innovation
Quality, Speed, Dependability,
Flexibility, Cost
Equal Importance to both Objectives
Introduction
Literature
Review
Case Study 1:
Honeywell
Case Study 2:
TARA
Developing a
Scorecard
Conclusion
C o n t
e n t s

6. SUPPLIER EVALUATION PROCESS
Linear Weighting Model
• Analytical Hierarchic Process
(AHP)
• Interpretative Structural
Modelling (ISM)
Total Cost of Ownership
Mathematical Programming
Model
•Payoff Matrix
• Data Envelopment Analysis
(DEA)
Introduction
Literature
Review
Case Study 1:
Honeywell
Case Study 2:
TARA
Developing a
Scorecard
Conclusion
C o n t
e n t s

7. LINEAR WEIGHTING MODEL
1986Timmerman
• Weights based on importance of the criterion.
• Two other types  Categorical and Cost based model
Analytical Hierarchic ProcessAHP
• Prioritizing Alternatives
• Hierarchy based on Goal, Criteria and Alternatives
• Criteria might be like Quality, Price, Service, etc
Interpretative Structural ModellingISM
• Objective – proper structure to the problem
• Identify relationship among criterion
• No Multiple supplier evaluation
Introduction
Literature
Review
Case Study 1:
Honeywell
Case Study 2:
TARA
Developing a
Scorecard
Conclusion
C o n t
e n t s

8. TOTAL COST OF OWNERSHIP (TCO)
Ellram (1995) – adds all costs like Transportation, Inspection, service to Purchasing
Price.
Based on fact that certain costs are from Nature of Suppliers
Mattson (2000) – companies for Accurate Purchasing process
Enarsson (2006) – intuition of certain suppliers being better than others
Parameters of TCO – Management, Delivery, Quality, Price, Service and activity related
to communications
Introduction
Literature
Review
Case Study 1:
Honeywell
Case Study 2:
TARA
Developing a
Scorecard
Conclusion
C o n t
e n t s

9. MATHEMATICAL PROGRAMMING
MODELS
Introduction
Literature
Review
Case Study 1:
Honeywell
Case Study 2:
TARA
Developing a
Scorecard
Conclusion
Data Envelopment Analysis (DEA)
• Charnes (1978)
• Effective Frontier from Decision Making Units (DMUs)
•Pareto Optimality
Payoff Matrix
• Soukup (1987)
•Futuristic scenarios for Suppliers
• Find out the most stable Supplier
C o n t
e n t s

10. HONEYWELL INTERNATIONAL INC.
ACS
(Automation
and control
system)
Delivery
Lead time
Quality
Production Savings
Payment terms
Introduction
Literature Review
Case Study 1:
Honeywell
Case Study 2:
TARA
Developing a
Scorecard
Conclusion
• Beneficial for
both the supplier
and Honeywell
• Scoring done out
of 100
C o n t
e n t s

11. TARA AEROSPACE LIMITED
Selection of
Suppliers
Approved Supplier List
Certification from Sikorsky
NADCAP
(National Aerospace and Defence
Contractors Accreditation Program)
AS9000 Certification
Introduction
Literature Review
Case Study 1:
Honeywell
Case Study 2:
TARA
Developing a
Scorecard
Conclusion
C o n t
e n t s

12. TARA AEROSPACE LIMITED -
CONTINUED
Performance Management System (PMS)
Supply chain governance
Integrates with supplier quality
SC risk management processes
Better visibility into supplier deliverables
Increase competitive advantage
Chargebacks for non-conforming material & supplies
Align practices between themselves & their suppliers
Introduction
Literature Review
Case Study 1:
Honeywell
Case Study 2:
TARA
Developing a
Scorecard
Conclusion
C o n t
e n t s

13. TARA AEROSPACE LIMITED -
CONTINUED
Vendor
Scorecard
System
(out of 100)
Quality
Delivery
Cost
Customer
Friendly
Service
Introduction
Literature Review
Case Study 1:
Honeywell
Case Study 2:
TARA
Developing a
Scorecard
Conclusion
Project
Delivering to
Schedule
Budget
Allocated
Sufficient
Deliverables –
produced &
approved
PMR
(Program Management Review)
C o n t
e n t s

14. PRESENT RATING SYSTEMS
Analytical methods
(AHP, DEA)
Rating Systems
(Categorical, Weighted Point)
Managerial Decisions
Less Meaningful KPIs
Introduction
Literature Review
Case Study 1:
Honeywell
Case Study 2:
TARA
Developing a
Scorecard
Conclusion
C o n t
e n t s

15. EFFECTIVENESS OF SUPPLIER
SCORECARD
Introduction
Literature Review
Case Study 1:
Honeywell
Case Study 2:
TARA
Developing a
Scorecard
Conclusion
Golden
Rules
Flexible –
Scoring and
Metrics
Real-time –
Updated and
Early Warning
Cost-based
Benchmarked
C o n t
e n t s

16. KEY CHARACTERISTICS
Introduction
Literature Review
Case Study 1:
Honeywell
Case Study 2:
TARA
Developing a
Scorecard
Conclusion
C o n t
e n t s

17. BALANCED SCORECARD
Introduction
Literature Review
Case Study 1:
Honeywell
Case Study 2:
TARA
Developing a
Scorecard
Conclusion
C o n t
e n t s

18. BALANCED SUPPLIER SCORECARD
Introduction
Literature Review
Case Study 1:
Honeywell
Case Study 2:
TARA
Developing a
Scorecard
Conclusion
C o n t
e n t s

19. BALANCED SUPPLIER SCORECARD
Introduction
Literature Review
Case Study 1:
Honeywell
Case Study 2:
TARA
Developing a
Scorecard
Conclusion
C o n t
e n t s

20. BALANCED SUPPLIER SCORECARD
Introduction
Literature Review
Case Study 1:
Honeywell
Case Study 2:
TARA
Developing a
Scorecard
Conclusion
C o n t
e n t s

21. SHORTCOMINGS IN PRESENT
SCORECARD
Industry Scorecards were quantitative in structure
Different Scorecards for Different supplier locations absent
CSR, Eco-Friendly factors not taken into consideration
Introduction
Literature Review
Case Study 1:
Honeywell
Case Study 2:
TARA
Developing a
Scorecard
Conclusion
C o n t
e n t s

22. BSSC – ENHANCEMENT FACTOR
Introduction
Literature Review
Case Study 1:
Honeywell
Case Study 2:
TARA
Developing a
Scorecard
Conclusion
• Local Economic policies, Location, Tax & Duties
FINANCIAL PERSPECTIVE
• Design for environment, Green SCM, Pollution free
Environment Friendliness
• Social Improvement, Growth of surrounding ecosystem
Social Development
C o n t
e n t s

23. “THE RESULT OF LONG TERM RELATIONSHIPS IS
BETTER AND BETTER QUALITY, AND LOWER AND
LOWER COSTS”
- W. EDWARDS DEMING