Supplier Ranking

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Supplier Ranking

It is possible to Rank suppliers on a scale from unacceptable to exceptional.

Unacceptable suppliers:

They fail to meet operational and strategic needs of the buying organization. Discontinuing business with unacceptable suppliers and substituting better ones is the normal action required. A especial case exists when such discontinuance may create even greater problems for the purchasing organization.

Acceptable suppliers:

They meet current operational needs as required by contract and provide a performance that other purchasers could easily match and, hence, acceptable suppliers provide no bases for competitive edge

Preferred suppliers:

Purchasers and suppliers work toward mutual improvements to eliminate nonvalue-adding activities. Preferred suppliers meet all operational and some of the strategic needs of the buying organization. Preferred suppliers react positively to initiatives of the purchaser to improve the current situation

Exceptional suppliers:

Anticipate operational and strategic needs of the purchaser and are capable of meeting and exceeding them. With them, mutual breakthroughs may be a source of significant competitive advantage

Supplier Relations

The key strategic decisions in supply management centre on which supplier to pursue and what kinds of relations to maintain with suppliers. Any organization’s desire to satisfy its customers and to provide continuing improvement in its customer service is dependent on its suppliers to help it accomplish this goal.

Supplier performance has a greater impact on the productivity, quality and competitiveness of the organization than most managers realize

In the supply chain perspective, the link between the buying organization and its direct suppliers is obviously one of the two primary external ones. The other link, between the buying organization and its customer, continues the chain on the exit, or distribution side. The ability of any organization to connect these two-external links through its internal organization, will to a large extent, determine the effectiveness of its supply chain.

The prime objective in supplier relations, is, therefore, to develop a supply link that will provide a short-and long-term strategic competitive advantage.

Supplier Relations Context

Depending on the nature of the purchase, whether it is a repeat, a modified repeat, or a new requirement, the size of the dollar amount involved, and the market condition, the critically or impact of the supplier choice may vary and the acquisition process and final decision may change. Today’s trend to team procurement recognizes that it is necessary to bring together key organizational resources outside and inside of the supply area to achieve sound supply choices. Moreover, the trend to fewer suppliers, long-term contracts, e-procurement, and continuing improvement in quality, delivery, price and service requires much closer coordination and communication between various people in both the buying and selling organizations. Therefore, improving buying-seller relationships is a key concern.

Outstanding supplier performance normally requires extensive communication and cooperation between various representatives of the buying organization and the selling organization over a long period of time.

When one organization supplies another with goods and services, the nature of the relationship between the organizations is a major influencer of the ultimate value and customer satisfaction achievable. Supply management is, therefore, not simply engaged in the exchange of money for goods and services, but also in the management of the buyer-seller relationship.

Supplier goodwill

Good sources of supply are one assurance of good quality today, and progressive thinking and planning is a further assurance of improved quality tomorrow. Superior sources of supply, therefore, are important asset to any organization.

It has long been considered sound marketing policy to develop goodwill on the part of customers toward the seller. This goodwill has been cultivated though the development of trademarks and brands, through extensive advertising, through missionary efforts as well as through regular calls by sales personnel, and thought the many other devices that have appealed to the imaginations of marketing managers.

Goodwill between a purchasing organization and its suppliers needs to be just as carefully cultivated and just as jealously guarded.

The Purchaser-Supplier satisfaction matrix.

One the major assessments a purchaser must make is whether the current relationship with a supplier is a satisfactory one or not. This relationship is highly complex, and different people inside the purchasing organization may have different perceptions of it

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