Table of Contents
Understanding and Using a Traditional Process
The selection of a source of supply is ultimately the responsibility of the purchasing function. This task is so integral to your duty to the organization that without final authority in the process, purchasing's ability to add value can be seriously compromised. The evaluation and final decision regarding sources of supply have repercussions all the way down the supply chain — quality, delivery, the ultimate success of a product or service, and profitability can all be affected by your sourcing decision.
Setting Up and Using a Traditional Rating System
This example of a weighted rating system should be applied to final candidates for source selection. At this point, candidates who don't meet established requirements should have already been eliminated.
Performing a Velocity Evaluation and Selection
Final decisions may rely heavily on supplier audits. Yet, as thorough as audits are, they can also be subjective, and the results may vary based on personalities and the experiences of the assessors. Purchasers must have a set of guidelines that are flexible but which lose little to interpretation. The real question is, "What will the supplier do in the future, and can I influence their direction?" To answer this question requires an additional approach to the evaluation and selection process.
MARTIN U. ESTRADA
Martin Estrada is the supplier base analyst for the Supplier Evaluation and Management Services group of Dun & Bradstreet Information Services, North America. Prior to joining Dun & Bradstreet, Mr. Estrada worked in real property assessment valuation and developed statistical models to forecast real estate prices. He holds an MBA from the Wharton School of the University of Pennsylvania.
MICHAEL HARDING, C.P.M., CPIM
Michael Harding is a principal of Michael Harding & Associates. He is a former corporate manager of JIT education and training for Digital Equipment Corporation. With 26 years of industrial experience, Mr. Harding has authored Profitable Purchasing and Service Velocity, and co-authored Purchasing. He has written articles for many publications, has been a guest lecturer at Beijing Materials College and MIT, and conducts seminars for Clemson University, the University of Wisconsin, Duquesne University, Incolda (Columbia), and Singapore's National Productivity Board. He holds degrees in business and law, and a master's in purchasing.
- The C.P.M. Study Guide, 6th Edition. NAPM, 1994
- Dobler, Donald W., Ph.D., C.P.M., Fearon, Harold E., Ph.D., C.P.M., and Killen, Kenneth H., Ph.D., C.P.M. The Purchasing Handbook, 5th Edition. McGraw-Hill, 1993
- NAPM Insights, February 1994, "The Purchasing Department's Policies and Procedures: ISO 9000's Influence"
- NAPM Insights, June 1994, "A Team-Based Approach to Supplier Evaluation"
FOR FURTHER READING
- First Worldwide Research Symposium Proceedings, March 1995, "Supplier Development: Current Practices"
- First Worldwide Research Symposium Proceedings, March 1995, "Supplier Partnerships: The Dream and the Reality"
- International Journal of Purchasing and Materials Management, Summer 1991, "A Managerial Guide for the Development and Implementation of Purchasing Partnerships"
- International Journal of Purchasing and Materials Management, Spring 1993, "Supplier Development Programs: An Empirical Analysis"
- International Journal of Purchasing and Materials Management, Summer 1994, "The Relative Importance of Supplier Selection Criteria: A Review and Update"
- Monczka, Robert M., Ph.D., C.P.M., and Trent, Robert J., Ph.D. Purchasing and Sourcing Strategy: Trends and Implications. Center for Advanced Purchasing Studies, 1995
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