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PROCESS
INTRODUCTION
Source selection is the process by which firms identify, evaluate, and contract with
suppliers. The suppliers may be large, medium or small, who supplies raw materials,
component, equipment, etc. Choosing the right supplier involves much more than
scanning a series of price lists. Your choice will depend on a wide range of factors
such as value for money, quality, reliability and service. How you weigh up the
importance of these different factors will be based on your business' priorities and
strategy.
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NEED OF Selection Process
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Supplier Selection Process
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Evaluation and Selection Decisions
Performing market tests
Facing countertrade requirements
During outsourcing analysis
Consolidating volumes
Conducting a reverse auction
When current suppliers have insufficient capacity
Reducing supply base size
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Identify Potential Sources
How well existing suppliers can satisfy cost, quality, and/or other
performance objectives
Strategic importance of purchase requirement
Technical complexity of purchase requirement
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Sources of Information
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Identify Key Sourcing Requirements
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Key Suppliers Evaluation Criteria
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Initial Supplier Evaluation
Score (1
Category Weight Sub weight Weighted Score Subtotal
- 5 scale)
Quality Systems 20
Process control systems 5 4 4.0
Total quality commitment 8 4 6.4
PPM defect performance 7 5 7.0 17.4
Management Capability 10
Management/labor relations 5 4 4.0
Management capability 5 4 4.0 8.0
Financial Condition 10
Debt structure 5 3 3.0
Turnover ratios 5 4 4.0 7.0
Cost Structure 15
Costs relative to industry 5 5 5.0
Understanding of costs 5 4 4.0
Cost control/reduction efforts 5 5 5.0 14.0
Delivery Performance 15
Performance to promise 5 3 3.0
Lead-time requirements 5 3 3.0
Responsiveness 5 3 3.0 9.0
Technical/Process Capability 15
Product innovation 5 4 4.0
Process innovation 5 5 5.0
research and development 5 5 5.0 14.0
Information Systems Capability 5
EDI capability 3 5 3.0
CAD/CAM 2 0 0.0 3.0
General 10
Support of minority suppliers 2 3 1.2
Environmental compliance 3 5 3.0
Supply base management 5 4 4.0 8.2
Total Score 80.6
Supplier Rating
System.xls
A Good Supplier Does the Following:
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A Good Supplier Does the Following:
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