Supply chain – measuring supplier performance
Supply chain – Measuring supplier performance
Supplier performance is vital for organisations as the supplier performance will have a significant impact on the organisation’s performance. This is because the quality of the supplies will have a direct impact and limit the quality of the products or services provided to customers, . Measuring the supplier performance will also allow you to ensure that your supplier can meet the organisation’s needs and requirements. If the supplier fails to do this, it is important to look for a new supplier which can provide a better supplier performance. Many organisations have been hindered by their suppliers and have not been able to reach their full potential due to the poor performance of their suppliers making the organisation lose business due to poor quality, .
4 Key Factors or KPIs
There are many qualities and factor to consider when measuring the supplier performance. The 4 most influential factors that should be considered when measuring the supplier performance are quality, delivery, price and support. These factors are areas which all suppliers must focus on when providing the best service to clients. According to , the weightings of these 4 factors are:
This means that quality and delivery are the most important factors to consider. Price is the next with a weighting of 20% and support of the suppliers is weighted at 10%. These weightings are used to make the measuring of the supplier performance most accurate.
The supplier quality is weighted so high because it impacts the organisation significantly. A supplier that provides high quality supplies will be much more valuable to the organisation as the organisation’s end products and services can be improved significantly, . Customers will be more satisfied by the quality of the products and services and the organisation can then charge more or sell more depending on the position that they wish to achieve. An organisation must measure that quality of the organisation to make sure that the organisation is getting the value that is necessary,
According to , the quality of the supplier can be further broken down into factors such as the durability of materials, freshness of the products, amount of features, etc. All these factors will influence the quality of the supplier and thus impact the overall performance of the supplier. The organisation must be able to ensure that the supplier can provide supplies that meet the organisations requirements and expectations in all quality factors.
The other major factor that must be considered is the delivery of the supplier. This makes a considerable amount of difference as an organisation expects their suppliers to be on time and make no mistakes or errors with the orders. A supplier that cannot provide the supplies on time is not better than having a very poor quality supplier or no supplier at all, . Suppliers have the responsibility of supplying goods on time and accurately. Suppliers which fail to do this are often preventing organisations from reaching their full potential and thus need to be avoided as soon as possible.......
Once the quality and delivery factors are considered, the price of the supplier must then be considered. Although many organisations may feel that the price should be one of the biggest factors, according to this is definitely not correct if the organisation wishes to be successful the price is only considered as it is used to measure the value of a supplier, in relation to other suppliers. It is vital for organisations to understand that the quality of a supplier is worth a lot when you consider the price, . The price of a good quality supplier may be higher, but if the supplies will satisfy the consumers more and thus increase the sales of the organisation. Most organisations that wish to grow rapidly must focus more on quality and deliverance and less on the actual price. However, if there are two suppliers that are identically the same in quality and deliverance, price will be the distinguishing factor between which supplier is most suitable.
The last factor that should be considered to an extent is the support of the supplier. This factor may only be applicable to certain suppliers however it is still a factor that many organisations use to measure the suppliers performance, . Examples of these support services include the flexibility of the suppliers, customer service, loyalty and ability to adjust for the organisation. All these factors must be considered when finally considering the performance of a supplier. Supplier support is something that makes a big difference to organisations that care about the effort and determination that the suppliers provide. It is common for large suppliers to provide great quality and deliverance, however smaller suppliers may excel in providing more personalised supplier services and support which can be useful.
When all of these factors are considered, the weightings and criteria will be reviewed the suppliers’ performances can then be measured accurately and reliably, . Organisations must understand the significance that the supply chain has on the organisation. Not only will this impact on the organisations satisfaction but it will have a direct influence on the customer’s satisfaction and loyalty. An organisation must ensure that the supply chain maximises the performance of the organisation and monitors the performance of each supplier, .
In conclusion, the supply chain has a significant impact on the organisation and an organisation must ensure that the suppliers are performing satisfactorily. There are many factors or KPIs which can be used to help monitor and measure the performance of each supplier. The 4 key KPIs or factors that need to be considered are quality, delivery, price and support of the suppliers. By ensuring that these KPIs are monitored, the organisation can then measure the supplier performance effectively and review whether the supplier is meeting the organisational requirements of whether the supplier must be replaced.…...
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