Essay On Supplier Evaluation

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Supplier evaluation is a term used in business and refers to the process of evaluating and approving potential suppliers by quantitative assessment. The purpose of supplier evaluation is to ensure a portfolio of best in class suppliers is available for use. There are several techniques are used by companies to evaluate suppliers and measure performance. The first step in implementing any of the techniques being discussed is to determine the attributes that should be considered. A firm should focus on the attributes that it finds most important. Some attributes are easy to measure while others are not. Some models are proficient in considering total costs, but they are usually very difficult to implement and time consuming. Thus, the resources …show more content…

The buyer assigns either a preferred (+), unsatisfactory (-), or neutral (O) rating for each of the selected attributes to every vendor. Then the ratings are totaled for each vendor. For example, ratings resulting in scores of two preferred (++), one unsatisfactory (-), and one neutral (O) would total one positive (+). A comparison of total scores reveals the highest rated vendor. The representatives of the involved divisions agree upon the ratings. Categorical supplier measurement is the easiest method to implement but suffers from subjectivity. It does not provide a detailed insight into the supplier’s true performance because the attributes being measured are weighted equally. Also, because the representatives of the involved divisions assign the ratings, this method relies on an individual’s perception about performance and not on quantitative …show more content…

The weight for each attribute is then multiplied by the performance score that is assigned. Finally, these products are totaled to determine final rating for each supplier. Typically this system is designed to utilize quantitative measurements. The advantages of the weighted point method include the ability for the organization to include numerous evaluation factors and assign them weights according to the organization’s needs. The subjective factors on the evaluation are minimized. The major limitation of this approach is that it is difficult to effectively take qualitative evaluation criteria into

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