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1. Improve competitiveness

1.1. By selecting the right suppliers

1.2. By finding the developing objects

2. Goals of supplier evaluation

2.1. Ensure the availability of potential suppliers

2.2. Measure and monitor supplier's performance

2.2.1. Reduce costs

2.2.2. Mitigate risks

2.2.3. Driving continuous improvement

2.3. Deepen the knowledge about each supplier

2.4. Assist with decision making

2.5. Highest priority to measure

3. Evaluation strategy

3.1. Suppliers segmentation

3.1.1. Kraljic’s portfolio model Strategic suppliers Performance evaluation. Leverage suppliers Financial impact Bottleneck suppliers Performance monitoring Noncritical/commodity suppliers Operational efficiency

3.1.2. Other ways Supplier commitment matrix Low commitment + Low actual commitment Low commitment + High actual commitment High commitment + Low actual commitment High commitment + High actual commitment Supplier characterization matrix - product development Low spend + High design input Low spend + Low design input High spend + High design input High spend + Low design input Supplier characterization matrix - spend Low commitment + High risk Low commitment + Low risk High commitment + High risk High commitment + Low risk

3.2. Supplier performance management actions

3.2.1. Strategic segment Highest priority to measure Strategic value Relationship quality Contribute to business Emphasis on continuous improvement

3.2.2. Collaborative segment Important to measure Operational performance measures Financial measures Encourage continuous improvement Relationship quality

3.2.3. Custom segment Operational performance measures Service level Relationship quality Reliability - avoid surprises

3.2.4. Commodity segment Lowest priority to measure Focus on operational performance basics Measure internal stakeholder satisfaction

4. Criteria for evaluation

4.1. Lagging indicators

4.1.1. Reactive approach

4.1.2. Operational results

4.1.3. Used after certain activities have occurred

4.1.4. Ex: Accounts payable cycle, quality metrics...

4.2. Leading indicators

4.2.1. Proactive approach

4.2.2. Value attributes

4.2.3. Predict/drive bottom line performance results.

4.2.4. Ex: Supplier performance problems, customer satisfaction...

4.3. Quantitative

4.3.1. Objective metrics

4.3.2. Based on empirically gathered ”hard” data

4.3.3. Ex: Transportation costs, scrap and rework...

4.4. Qualitative

4.4.1. Subjective metrics

4.4.2. KPIs - Key Performance Indicators

4.4.3. Based upon human opinion or perception

4.4.4. Ex: Customer complaints and satisfaction...

4.5. Performance expectation

4.5.1. A statement of a business practice, process, policy, results from Supplier’s performance Supplier's behavior

4.5.2. Look forward

4.5.3. Development methods Strategy deployment Corporate goals Corporate strategies Procurement strategy. Other sources Business models Value stream mapping Business drivers

5. Evaluation methods

5.1. Surveys & Questionnaires

5.1.1. Types RFI surveys Quality surveys Supplier surveys

5.1.2. Important issues Clarity of the questions Time to complete Timing of deployment Survey length Confidentiality Team experience and capabilities Communication strategy Budget Language Cultural background Compliance

5.2. Scorecards

5.3. Site visits

5.3.1. Suit to Critical/strategic product or service Suppliers represent high levels of spend Sole-source, single-source suppliers High switching costs

5.3.2. Brief visits

5.3.3. Specific business process area visits

5.4. Supplier assessment

5.4.1. Four levels Product level Improve product quality Process level Investigate production process Quality assurance system level Investigate supplier quality organization SOP – Standard Operating Procedure Company level Financial aspects Quality aspects Management aspects

5.4.2. Two types Subjective methods Using personal judgments Objective methods Quantify supplier’s performance

5.4.3. Techniques & tools Spreadsheets Compare/asses quotations from suppliers Qualitative assessment Close business relationships Vendor rating Quantitative data Measure price, quality & delivery reliability Current suppliers Standard time Supplier audit Scopes Tasks Types of suppliers When Requirements for suppliers Audit process Cost modeling Specialists' visits Production technology, product cost