Question

Purchasing and Supply Chain Management

Question 3

Identify five supplier evaluation criteria and analyze their significance in supplier selection.                                                                        (20 marks)

Answer 1

Supplier Evaluation Criteria

• Replenishment Lead Time : It plays a very important role in supplier selection. It is the time taken by the supplier to deliver the order once the order is placed by the customer. So if a supplier's replenishment lead time is low, he would be considered better.
• On-time performance : In today's scenario, no manufacturer wants to keep large amount of inventory in their warehouse. They rely completely on on-time delivery by the supplier. So it is very crucial.
• Supply Quality : Quality of supply plays an important role in evaluating the supplier. Supplier should supply good quality material so that the customers would be satisfied.
• Pricing Terms : Suppliers should have flexible and low pricing terms and condition so as to provide the facility to the customer.
• Information Coordination capability : In today's scenario of high technology, supplier should be ready and capable to coordinate through information technology so as to ease the process of supply. For instance, Walmart has made it mandate for all its suppliers to install information technology gadgets and enable to give the reall time information to all the suppliers.