Supplier Evaluation System Research Articles

Purchasing practices in small- to medium-sized enterprises: An examination of strategic purchasing adoption, supplier evaluation and supplier capabilities

The benefits that can be derived from effective purchasing have long been recognised in the management literature. Despite a growing body of research on purchasing practices in small- to medium-sized enterprises (SMEs), a number of key issues remain under-examined. We investigate SME purchasing practices in terms of (1) the degree to which purchasing is regarded as a ‘strategic’ activity by SMEs, (2) the use of supplier evaluation systems by SMEs and (3) the supplier capabilities emphasised by SME buyers. Through a survey of UK SME managers, we find that purchasing practices varied greatly across SMEs. Purchasing formality is generally low with limited evidence of purchasing being employed strategically and with many firms not undertaking formal supplier evaluations. In terms of supplier capabilities, we find that SMEs differ in the capabilities they prioritise, with three distinct groups evident. These groups are labelled ‘holistic’, ‘process’ and ‘logistics’ based on the supplier capabilities they emphasise. These three groups of firms also differed in terms of the emphasis they placed on strategic purchasing, supplier evaluation, technological focus and how they compete in their main markets, but not in terms of firm size or number of suppliers utilised. The implications of these findings are discussed and areas meriting future research are proposed.

Empirical relationships between some manufacturing practices and performance

Intense global competition, rapid technological changes, advances in manufacturing and information technology and discerning customers are forcing manufacturers to adopt manufacturing practices and competitive priorities that enable them to deliver high quality products in a short period of time. Identifying manufacturers’ competitive priorities and effective manufacturing practices has long been considered one of the key elements in manufacturing strategy research. This paper presents the results of a study conducted to identify some of the effective manufacturing practices that have a significant influence on manufacturing performance. This study also identifies the main competitive objectives of manufacturing industries that participated in the study. The results reported in this paper are based on data collected from a survey using a standard questionnaire administered to 1000 manufacturers in Australia. Evidence indicates that product quality and reliability are the main competitive factors for manufacturers and price has become surprisingly a relatively less important factor. Results show that simultaneous pursuit of advanced quality practices can neutralize the potential negative impacts of manufacturing difficulties and significantly improve product quality and manufacturing performance. Failure mode and effect analysis (FMEA) is shown to be an important tool for improving product quality and on time delivery performance. FMEA practice driven by the intention to improve customer satisfaction is more effective than that practised to fulfil customer requirements. Effective supplier relationships are shown to contribute positively to the manufacturing performance. The results also suggest that maintaining a supplier rating system and product data management and regularly updating them with field failure and warranty data are important manufacturing practices.

Selection of the most suitable distribution channel using fuzzy Analytic Hierarchy Process in Turkey

The supplier evaluation and selection system are an important problem that can significantly affect the future competitiveness and the performance of an organisation in logistic sector. The distribution channel type has an effect on the supplier performance. This paper presents a comprehensive hierarchical structure for selecting the right distribution channel. The structure can systematically build the goals of the most suitable distribution channel selection to carry out the business goals and strategies of an organisation and a logistic firm. In this paper, fuzzy Analytic Hierarchy Process (AHP)?based methodology is discussed to tackle the different decision criteria like risk factors, cost and quality. Saaty's AHP method was developed with fuzzy logic to assist in multi-criteria decision making problems. The implementation of the system is demonstrated by a problem having four stages of hierarchy which contains different criteria and attributes. The model is explained by an illustrative example.

A comparative study of manufacturing practices and performance variables

The reported study was conducted to compare and contrast current manufacturing practices between two countries, Australia and Malaysia, and identify the practices that significantly influence their manufacturing performances. The results are based on data collected from surveys using a standard questionnaire in both countries. Evidence indicates that product quality and reliability is the main competitive factor for manufacturers. Maintaining a supplier rating system and regularly updating it with field failure and warranty data and making use of product data management are found to be effective manufacturing practices. In terms of the investigated manufacturing performance, Australian manufacturers are marginally ahead of their Malaysian counterparts. However, Malaysian manufacturers came out ahead on most dimensions of advanced quality and manufacturing practices, particularly in the adoption of product data management, effective supply chains and relationships with suppliers and customers.

Supplier evaluation and management system for strategic sourcing based on a new multicriteria sorting procedure

Supplier selection and evaluation is increasingly seen as a strategic issue for companies. Unlike the past, an emerging trend is to select suppliers where a long-term relationship is desired and supplier involvement in product development is required and to sort suppliers into categories based on performances. This paper describes a supplier evaluation and management methodology for strategic sourcing, in which suppliers are assessed considering supplier's co-design capabilities and categorized based on overall performances, potential reasons for differences in performance of supplier groups are identified, and performances of the suppliers are improved by applying supplier development programs. A new multicriteria sorting method based on the PROMETHEE methodology is also introduced. By means of a strategic supplier selection example, we demonstrate that our methodology is a flexible and responsive decision-making tool for assessing strategic suppliers.

An enterprise collaborative management system – a case study of supplier relationship management

In this paper, a server‐based enterprise collaborative management system using enterprise application integration technology is developed for trial implementation at Honeywell Consumer Products (Hong Kong) Limited, in the area of supplier relationship management. The system facilitates supplier selection using an integrative case‐based supplier selection and help desk approach to select the most appropriate suppliers, based on their past performance records from a case‐based warehouse. Discusses a case study to integrate Honeywell's supplier rating system and product coding system by case‐based reasoning technique to select preferred suppliers during the new product development process. Finds that the outsource cycle time from the searching of potential suppliers to the allocation of orders is greatly reduced while performance of suppliers can be monitored simultaneously.

Development of a case based intelligent supplier relationship management system – linking supplier rating system and product coding system

An intelligent supplier relationship management system (ISRMS) integrating a company’s customer relationship management (CRM) system, supplier rating system (SRS) and product coding system (PCS) by the case based reasoning (CBR) technique to select preferred suppliers during the new product development (NPD) process is discussed. By using ISRMS in Honeywell Consumer Product (Hong Kong) Limited, it is found that the outsource cycle time from the searching of potential suppliers to the allocation of order, as well as the delay in delivery of goods of suppliers after order allocation, are greatly reduced. In addition, performance of suppliers can be monitored effectively.

An enterprise collaborative management system: a case study of supplier selection in new product development

Businesses that remain competitive must not only look into their internal operations, but also communicate and work concurrently with all players in their supply chain network. In this paper, the supplier relationship management module of a server-based enterprise collaborative management system (ECMS) using enterprise application integration (EAI) technology for trial implementation at Honeywell Consumer Products (Hong Kong) Limited, is discussed. A case study using ECMS's supplier relationship management system (ISRMS) to integrate Honeywell's supplier rating system (SRS) and product coding system (PCS) via the case-based reasoning (CBR) technique, to select preferred suppliers during the new product development (NPD) process, is also reported here. It is found that the outsource cycle time, from the searching of potential suppliers to the allocation of orders, is greatly reduced. Through the ISRMS of ECMS, manufacturers identify preferred suppliers to form a supply network on which they depend for products, services and distribution effectively.

Design of a case based intelligent supplier relationship management system—the integration of supplier rating system and product coding system

The design of supplier relationship management to facilitate supplier selection using an integrative case based supplier selection and help desk approach to select the most appropriate suppliers together with their past performance records from a case base warehouse has become a promising solution for manufacturers to identify preferred suppliers and trading partners to form a supply network on which they depend for products, services and distribution. In this paper, an intelligent supplier relationship management system (ISRMS) integrating a company's customer relationship management system, supplier rating system and product coding system by the case based reasoning technique to select preferred suppliers during new product development process is discussed. By using ISRMS in Honeywell Consumer Product (Hong Kong) Limited, it is found that the outsource cycle time from the searching of potential suppliers to the allocation of order, as well as the delay in delivery of goods of suppliers after order allocation, are greatly reduced. In addition, performance of suppliers can be monitored effectively.

Development of International Procurement of Tomato Raw Materials by Japanese Tomato Processor

The purpose of this paper is to clarify how food processors participate in the internationalization of agricultural product flow using the case of Kagome Co., Ltd.. The points under discussion are: 1) the role of Japanese food processors in the spatial change of agricultural product import regions to Japan; 2) the mechanism of the change in procurement regions by Japanese food processors; and 3) the restructuring of domestic production areas by Japanese food processors with progress in international procurement. The quantity of tomato raw materials (tomato paste) imported by Japan has expanded rapidly since 1972, in advance of other vegetable products. The spatial distribution of import regions of tomato products to Japan has changed markedly, from a concentrated distribution depending on mainly Taiwan in the 1980s to a dispersed distribution depending on many import regions in the 1990s. Until the mid-1980s, the distribution of import regions was influenced by CIF cost and the historical relation between Kagome and the Taiwan market. But after the 1990s, the dispersion of import regions was influenced by CIF cost and the procurement strategy of Kagome, which controls import of almost 50% of its tomato raw materials. The mechanism of international procurement by Kagome was examined. Plural procurement alliances with foreign suppliers concluded after the 1980s have had an effect on the dispersion of import regions of tomato products. However, Kagome's evaluation of foreign suppliers is not limited to cost factors. Kagome also emphasizes diversification in tomato raw materials using, risk dispersion in procurement, and year-round procurement. The supplier evaluation system thus takes multiple factors into account. In the latest system, cost factors have only a 40% weight in the total evaluation. With progress in international procurement, Kagome has restructured its domestic procurement process. The restructuring included two factors : a reduction of processing tomato production and a change in processing tomato varieties. The change in processing tomato varieties was the more important. Kagome needed domestic production areas to grow processing tomatoes for tomato juice, which cannot be replaced by imported tomato raw materials. Therefore Kagome switched to the use of the Kagome varieties for tomato juice. The results of this study indicate the relationship between the development of international procurement and restructuring of domestic procurement.

Strategically managed buyer–supplier relationships and performance outcomes

AbstractAn empirical analysis of purchasing's strategic role in the firm is presented. This study uses data collected from high level purchasing executives at the Director/VP level representing a large cross industry sample of 739 firms. The data analysis is rigorous. Using data from 571 of the 739 firms, correlation analysis and exploratory factor analysis is performed. Data from the remaining 168 firms is used to conduct structural equation modeling. This is the first attempt to examine a structural model of strategic purchasing and its influence on supplier evaluation systems, buyer–supplier relationships, and firm's financial performance. Scales are developed to measure each construct and are shown to be reliable. Five hypothesized relationships are presented and supported by the literature. The first, second, and third hypotheses link strategic purchasing to supplier evaluation systems, buyer–supplier relationships and firm's financial performance, respectively. The fourth hypothesis links supplier evaluation systems to buyer–supplier relationships. And, the fifth hypothesis links buyer–supplier relationships to firm's financial performance. The results of the data analysis provide support for each of the five hypotheses above. The implications of this research are that a strategic purchasing function is important to the success of the firm. Firms that have a strategic purchasing function are more likely to implement a supplier evaluation system. This provides purchasing with a better understanding of which suppliers are performing well and which suppliers are not performing well. Increased emphasis on strategic purchasing and supplier evaluation systems are critical for firms seeking to establish long‐term relationships with their suppliers. Based on the findings of this study, strategically managed long‐term relationships with key suppliers can have a positive impact on the firm's financial performance.

Use of ISO 9000 and Baldrige Award Criteria in Supplier Quality Evaluation

Purchasing and materials managers are increasingly concerned with ISO 9000 registration, both as a prerequisite for participation in global markets and in supplier selection. The ISO 9000 guidelines link certification requirements to quality‐related corporate issues, and can be used as a screening tool for companies when assessing a supplier's process conformance. However, many important areas of quality management are not addressed by ISO 9000. The Malcolm Baldrige Award criteria, on the other hand, provide a comprehensive framework within which to conduct an evaluation of suppliers’ quality systems.The similarities and differences between the two frameworks are compared in a map that is validated using survey data from 314 North American organizations. The results suggest that ISO 9000 registration criteria fail to measure key areas of quality management, including strategic planning, employee involvement, quality results, competitive benchmarking, and customer satisfaction. Based on these results, the implications for the design of supplier quality measurement and evaluation systems are discussed.

Performance Based Evaluation Systems Under Total Quality Management

Many firms are moving toward closer relationships with key suppliers to support total quality management (TQM) and just‐in‐time (JIT) systems. Because these systems dictate closer working relationships with suppliers, supplier evaluation systems will also undergo changes. This article focuses on these changes.Evaluation systems under TQM/JIT must be broader in scope and oriented toward proactive problem solving and continuous improvement. They will be characterized by short‐ and long‐term improvements jointly selected by both parties.These propositions are supported by a case study at a large corporation that successfully implemented TQM/JIT. Results indicate that the firm improved its supplier evaluation and selection process. These improvements led to increased customer satisfaction and lower costs. Improvements realized in the evaluation process were accomplished through the increased use of data, customer and supplier input, and feedback from the purchaser. Finally, the case study reviews the broader evaluation measures used in a TQM/JIT system.

Motivating and Monitoring JIT Supplier Performance

Measuring purchasing performance in an organization that utilizes a JIT system requires a broader view of quality than is the case in a non‐JIT operation. This article reports the results of a study which showed that experienced JIT managers track quality costs and their impact on scrap and rework, plant efficiency, and customer return costs, as well as on traditional incoming inspection costs. Forty‐six percent of the firms studied use some type of formal supplier evaluation system, and purchasing departments typically are evaluated on supply base management techniques involving lead‐time, delivery, quality, and inventory improvements.