Importance of supplier evaluation becomes apparent if you are to ensure that your supply chain is effective. Think of it this way, your organization exists in a supply network in which there exist multiple tiers of suppliers. Wastage, hidden cost drivers or risks not taken care of, in one level of the network will trickle down directly or indirectly to your organization.
There are many reasons why you need to measure the performance of your suppliers and increase your visibility into their operations.
THE IMPORTANCE OF SUPPLIER EVALUATION
1. It will raise supplier performance level
By evaluating your suppliers you are in a position to ensure that their performance are in line with the key performance indicators you have in place as an organization. Poor performing suppliers may be terminated or introduced to a supplier development program since every organization has a goal to maintain the best supplier portfolio.
2. Identify and get rid of hidden waste and cost drivers.
A poorly designed supply chain is full of hidden costs and wastes which can impact your business negatively, things like poor delivery time, inflated prices etc. By evaluating the suppliers you are dealing with, you quickly uncover these issues which if left undealt with, will down the line lead to loss of customers, reliability issues, and poor quality products among others.
3. Organisation can leverage the supply base.
What suppliers tell you that they can do and what they can actually do is not always the same thing. That straight away tells you of the importance of supplier evaluation.
A proper understanding of suppliers through an evaluation based on the best suited parameters can enable the organization to choose the suppliers who meet their standards and who can enable them eliminate unnecessary costs hence improve the overall performance.
4. Align supplier business practices to customer needs.
A good way to ensure you are meeting your customers’ needs is work backwards on your supply chain and make sure that suppliers you are dealing with are operating in a manner that is aligned to your customers’ needs, for example, if your customers are keen on whether or not your products are environment friendly then don’t deal with supplier that do not care about such, doing so will not only be a public relation nightmare for you but will also mean losses in the long run.
Conclusion
Understanding supplier performance through evaluation is crucial to ensure a well-functioning supply chain and to enable an organization to secure a competitive edge. Improving the performance of the key suppliers is always the goal of the whole evaluation process.
Confirm Sign Up via the Email you provided