Purchasing Organization Metrics Report

Zachary T. Trigger

UMCG

Purchasing Management

Professor James Swaim

February 2, 2020

The criteria for the selection of suppliers has significantly changed over the years. In the past, price was utilized as the primary criteria for the selection of suppliers together with location and preferences. However, there has been a greater emphasis on food safety and quality hence the need to improve on the quality of raw materials supplied. Choosing the right suppliers can help an organization to meet and supersede the set regulatory standards while increasing consumer demand and building the brand reputation. The supplier that is chosen has to be able to deliver quality and safe ingredients which will translate to quality and safe end products for the consumer (Eldridge, 2012).

Identifying the appropriate supplier is a costly affair but has significant results if done in the correct manner. The opinions of the stakeholders are sought to determine the appropriate criteria to follow in selecting a supplier. Some of the stakeholders include members of the research and development, processing, quality assurance, marketing and purchasing among others. After the identification of the appropriate criteria potential suppliers are identified and their capabilities and pricing is compared. This stage involves working with the potential suppliers and maintaining open communication where the manufacturer explains to the supplier the manufacturing process. While cost is a significant driver, value is paramount and it should be key in selecting the appropriate supplier. Some of the factors which contribute towards value include delivery commitments, responsiveness and reliability, hard and soft resource savings and customer service (Eldridge, 2012).

The raw materials that are being sought are highly perishable and one criteria for the supplier is that it should be able to reach the company in a fresh state. This should be one of the factors to look for when sourcing for the supplier. Because of the sensitive nature of the raw materials that are required, it is paramount that the supplier is able to assure of the quality of the raw materials they will be supplying. For example, the supplier for hearts from pigs should have a pig farm rather than outsourcing from another farm. This way, they are able to raise the pigs to standard and consequently they will have good quantity hearts to serve the purpose aimed at by the company. This is carried out on all of the other required raw materials.

Before signing the contact, there is need to carry out an audit on the suppliers to determine whether or not they have the capacity to deliver. The audit is carried out to enable the determination of whether the supplier is compliant or has some significant compliance or quality system failures. These shortcomings have a significant impact on the supplier’s capability to produce top quality products. This procedure is carried out on the best suited supplier since it is a costly process and it aims at protecting the manufacturers from contracting a supplier that may be good in the books but this does not match the actual situation of the company. The audit also aims at helping the company to understand the weaknesses and strengths of the supplier before the relationship is made official. Therefore, by carrying out an audit of the suppliers, the company is able to determine the capability of the supplier to meet the company’s requirements (Assemblymag, 2001).

Evaluating the performance of a supplier is important to grade them and determine whether or not the partnership will continue. Evaluation can be carried out through a self-assessment questionnaire by the suppliers. This helps the supplier to identify any existing gaps ad take the appropriate measures towards covering them. It also helps the company to understand how the supplier understands its operations and whether or not they are willing to make improvements on existing discrepancies. The company should also set up appropriate metrics with which the measurement of performance can be carried out. Some of the metrics which can be used include lots that are rejected, documentation errors and perfect shipments among many others. The metrics allows for the categorization of the supplier as either full partner, associate partner, high risk or incapable. A full partner is a supplier that has been able to meet all the company’s expectations and can be trusted to supply quality raw materials to the manufacturer. An associate partner is a supplier that falls short of the expectations and needs to put in more effort so as to attain the status of a full partner. High risk supplier is utilized for current production but it is advised not to award them with future business. An incapable supplier does not meet the needs of the manufacturer and hence they should be let go as soon as possible. These categorizations help the company to know which supplier they need to replace and which one they need to retain. It plays a significant role in the continuous process of assuring quality in the raw materials that they are supplied with (Assemblymag, 2001).

Establishing long term supplier relationships has many advantages on the company. It leads to a reduction is costs since there is a significant amount of resources that is associated with searching for a supplier including months of determining the appropriate one and setting up a relationship with them. With long term suppliers, there is an increase in communication and efficiency hence a smooth operation unlike in instances where the supplier is regularly changed. With the long term relationship, there is also room for continued improvement and the supplier is able to better understand the needs of the manufacturer and hence they are able to satisfy them better (Figues, 2020). Long term suppliers are those that have been able to achieve the metrics of full partnership and the two entities have been able to establish a level of trust and by working together, the company has been able to achieve and supersede the required quality.

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