Question

1. Briefly define why supplier selection is critical to successful supply chain effectiveness.

2. Discuss the various sources of information buyers can utilize when seeking potential sources of supply.

3. Discuss the pros and cons of single and multiple sourcing and the various risks associated with each of these buying strategies.

Answer 1

as per as HomeworkLib guidlines expert can solve 1 question in one go due to time contraint i have solved two .pl ask the third question seperately

Discuss the various sources of information buyers can utilize when seeking potential sources of supply.

• Current or existing suppliers
  • Buyers often look to existing suppliers to satisfy a new purchase requirement.
• Sales representatives
  • Purchases receive sales and marketing information from sales representatives, who can prove to be a valuable source of information about potential sources.
• Internet searches and social media
  • Buyers can view pictures of the facility, find information about the management team, and sometimes a customer list.
  • LinkedIn, Facebook, and Twitter provide resources to extract information about a potential supplier and its key employees.
• Informational databases
  • Databases allow purchasers to quickly identify suppliers potentially qualified to support a requirement.
  • The database may contain information on current products, the supplier’s future technology roadmap, process capability ratios, and past performance.
• Organizational knowledge
  • This typically comes from experienced purchasing personnel that have strong knowledge about potential suppliers to improve the sourcing process.
• Trade journals, directories, and trade shows
  • Trade journals can be used for suppliers to advertise their products or services.
  • Trade directories can be a valuable source of initial information for a buyer who is not familiar with an industry or its suppliers.
  • Trade shows are an effective way to gain exposure to a large number of suppliers at one time.
• Second-party or indirect information
  • This information can be used for buyers to gather information from other suppliers, especially from purchasers who publicly recognize their best suppliers.
• Internal sources
  • Internal sources can provide a great deal of information about potential supply sources and their experiences in using the particular supplier across units.
  • This information can be shared in corporate purchasing councils, informal meetings, strategy development sessions, purchasing newsletters, or development of a comprehensive database containing information about potential supply sources.

Discuss the pros and cons of sole sourcing vs. single sourcing vs. multiple sourcing, and the various risks associated with each of these buying strategies.

• Single sourcing
  • Pros:
    • Optimum leverage and power over the supplier
    • An ability to develop closer relationships
    • Development of value adding programs, such as supplier stocking and process improvement
    • More choices are available for buyers to choose from so there is opportunity for negotiation
  • Cons:
    • If a single source supplier goes it of business or quality issues, it may impact the purchasers so the buyers should have backup suppliers.
  • Risks:
    • If a business gets impacted as it takes time to switch vendors; however, the risks are pretty minor for supply disruption, potential damage, and the company’s bottom line.
• Multiple sourcing
  • Pros:
    • Improved assurance of supply
    • Check against price increases
    • Active competition that motivates suppliers to perform effectively
    • Offers the best price due to increased competition amongst suppliers
    • Reduces business risk because there are multiple options of supply
  • Cons:
    • It may lead to confusion in allocation and daily operations
    • Administrative costs are highest when using multiple sourcing because buyers must manage multiple suppliers.
  • Risks:
    • The risk associated with multiple sourcing has the potential of unethical practice among suppliers in order to take advantage to take business.