2.1 Introduction
Effective supplier selection plays a crucial role in creating a competitive edge for an organisation and in ensuring an optimistic outcome on its performance (Chin-chun, Kannan, Leong & Tan, 2006:217). Supplier selection is used in most industries to try to pick out the most valuable supplier for an organisation. This aspect is said to be one of the most important phases in the purchasing process (Johnson, Leenders & Flynn, 2011). Supplier selection does not only deal with finding the best service, the cheapest prices or the fastest deliveries (Johnson et al., 2011). It provides the organisation with the knowledge to provide the most optimal supplier (Johnson et al., 2011). Choosing a good supplier has a major impact on whether
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The physical and social status of the supplier needs to be thoroughly analysed before considering a global supplier (Konig, 2015). These factors are extremely important as the long term relation may cause problems in the supply of the goods.
2.6.7.2 Political Stability
The political status of the country and its nature towards the business policies is extremely vital as it affects the long term relationship between the supplier and the manufacturer (Mwikali & Kavale, 2012:193).The purchaser should consider choosing suppliers in countries where the government is more stable preventing any problems (Konig, 2015).
2.7 The Challenges of Supplier Selection
Supplier selection is an important process that addresses how organisations choose suppliers to enhance their performance as well as the quality of the end product (Chin-chun et al., 2006:217). Supplier selection problems usually is very complicated, because variety of uncontrollable and unpredictable factors that affect evaluation and the decision-making process (Kontis & Vrysagotis, 2011:207). The competitive edge that every organisation requires depends greatly on how the organisation deals with the reduction of cost, enhancement of quality and customer service (Haque, Anam & Ahmed, 2014:6). Suppliers need to be able to provide goods at the right cost, in the right quantity, at the right time and from the right suppliers (Haque et al, 2014:6). The challenges of supplier selection
Suppliers must maintain good relations with the companies in the industry. This is low because there are multiyear service contracts and the delivery industry uses items such as vehicles, employee benefits, general goods and airline contracts associated with overhead of running business, but all contracts are rewarded through an RFP process. There are enough players in the market and had high fixed cost and thus have substantial buying power.
In such situations, the buying industry often faces a high pressure on margins from their suppliers. The relationship to powerful suppliers can potentially reduce strategic options for the organization.
One problem anyone is going to have in just about any industry is the amount of inventory to keep at warehouses. If there is too much inventory, then high costs will become a problem and hurt your bottom line. At the other end, if you try to save too much money by keeping inventories dangerously low, it may create stock-outs. These can infuriate your clients
Hokey Min report the study of AMUT used for the international supplier selection. Based on his study, MAUT can systematically measure both qualitative and quantitative factors and structure complex problems with a large number of criteria, attributes and
It is suggested for any organization to review, reassess any existing supply chain management or any delivery techniques, before developing a new supply chain method so that any exposure to high risk of failure is reduced. Somerset as a company taken advantage of outsourcing and transferred it product manufacturing to China leveraging low cost labor and raw material. The labor cost and other cheap material reduce Somerset overhead cost, but there is always the risk of not delivering product on time due to the foreign country political climate, change in tax and tariff and local
This report has clearly in detail described the meaning, benefits as well as the need and challenges of the RFID in the supply chain system. While RFID comes with a larger magnitude of benefits than the bar code, it’s an expensive medium and comes at a price that may be prohibitive to many businesses. On the one hand, RFID is advantageous in different areas of the supply chain and does not require line-of-sight scanning; it helps in labor reduction, enhances visibility of products and processes , and helps in inventory management. On the other hand, RFID is an expensive solution, lacking benchmarks or standards, suffers from some adverse deployment issues, and suffers from major privacy concerns. However with the ultimate aim to see the establishment of item-level tracking which should act to revolutionize SCM practices, RFID is here to stay.
Definitions of ESI and EBI are arrived at based on extensive literature review and highlighted in block diagrams. ESI is perceived as an outcome of long- term relations and well managed permanent supply-chains which lead to knowledge integration, trust and cooperation and proactiveness. EBI on the contrary is perceived as an initiative to accumulating ‘relational capital’ which leads to ‘product perfection’. Evaluation of applicability and non-applicability of ESI to the four roles of SCM in construction by Vrijhoef and Koskela, 2000 is carried out. ESI is also pictured as ‘early supplier inputs’ as well as ‘early supplier intervention’. The script has been fairly positive on the application of ESI to the 4 roles other than to improve the supply chain. Within a buyer-supplier framework and the life span of a project, ESI has its limitations in contributing to SCM.
Since mid-90, technology changed procedures for evaluating supplier’s relationships. Before technology, Suppliers relationships used to be an isolated activity disconnected from others companies’ activities highly influenced by conflict of interest. But when technology started to provide accurate data, companies begin the focus on inventory management activities increasing the importance of procurements departments’ evaluation as a way to reduce supply chain cost. With data, procurement can evaluate suppliers and their benefits for the company. In today business environment, the company dilemma is evaluating if the supply chain should be vertical, full outsourced of mix, considering industry maturity impact and price competition (Chopra & Meindl, 2007; Slack & Lewis, 2011).
During hard economic times it may be possible for a firm to switch suppliers be it from domestic to international or vice-versa for some required materials. However, this might not be desirable for all materials. Another issue that often occurs is the delay in shipment with the transportation companies. This may require that certain parts be divided into smaller batches and shipped separately, which would increase the lead time and shipping costs.
Purchasing process is the process of buying the right material, at the right quantity, at the right moment, at the right price and from the right supplier ( Heinritz et al, 1986). It can also be defined as the way an organisation behaves towards it suppliers, as suppliers are the pillar of strength for all organisations at large. According to We...
As pointed by Parsons A.L (2002), there was increasing dependent on the relationship and customers is demanding to receive high standard of products and services for them to sustain the business in the intense manufacturing environment. Besides, Xu et al. (2008) has highlighted that supplier is developing a long-term relationship with their crucial suppliers to increase the competitiveness and to establish an effective and efficient supply chain. Trend (2005) also mentioned that work closely in partnership with suppliers is the only way to survive in today’s competitive business environment.
Suppliers: can be viewed as the main artery, they supply the materials used in production. The larger the suppliers’ contribution to the business: the greater their impact on the business decisions. For instance an owner owns a fishing business “Fin-tastic Fish Shop”, where they provide fish fillets to local restaurants. The owner depends on eight fishermen from Gouyave who collectively own a large fishing boat. Unfortunately a major accident occurs and the boat is out of commission. The owner of Fin-tastic Fish shop is now left stranded and may have to depend on
(2014) deduced that procurement performance can be assessed by focusing ondelivery,flexibility, quality, cost and technology. Optimal performance attainment is dependent onhow current suppliers`relationships aremanaged so asto ensure constant availability of needed quality supplies at the organization. This will ensure that sourced materials are indeed procured at the right costand atthe right time. Procurement performancestrives toenable improvements in the procurement process at the organizationso as to improve on qualitydelivery of firm products and servicesatleast possible time and
In general, there are different types of procurement type for various situations due to no one method can be suitable under the all different construction project. In this case, there are four procurement paths, which are traditional, design and build, management and design and manage, will be advised to use. However, each method has different aspects of advantages and disadvantages.
A company’s relationship with key suppliers is a vital part of any company’s success. A good supplier relation means better price, meeting company standards and a better service level. That 's why when Honda started working with Modine, Honda made sure that its relationship with Modine was