Chapter-Four: Solicitation Planning, Solicitation, Evaluation and Selection
Chapter-Four: Solicitation Planning, Solicitation, Evaluation and Selection
Chapter-Four: Solicitation Planning, Solicitation, Evaluation and Selection
Introduction
Solicitation planning
Solicitation
Key supplier evaluation criteria
Developing a Supplier Evaluation and
Selection Survey
Supplier Selection
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Step 1: Initial supplier qualification
Supplier qualification is the first step towards
supplier selection.
The GOAL is to identify suppliers who meet
the requisite product and process standards
and are capable of supporting the buyer’s
long-term objectives.
Because organisations are resource
constrained, qualification helps to reduce the
pool of potential suppliers to a more
manageable number for detailed evaluation
and selection.
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Cont’d...
Buyer firms will usually wish to assess two
categories:
1. Manufacturing capabilities: Manufacturing
capabilities are best conceived as stocks of
strategic assets that are accumulated through a
pattern of investments over time and cannot be
easily imitated, acquired by trade, or substituted
(Dierickx and Cool, 1989).
Thus, capabilities such as low cost, quality,
flexibility and delivery performance are stocks of
strategic assets that the supplier has accumulated
over time.
2. Financial viability: Buyer firms also need to assess
the long-term financial health of the suppliers.
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Step 2: Agree measurement criteria
Score X is = Σ performance xy X Wy
1
Where X = Supplier X
Y = Performance Dimension Y
Performance XY = rated performance of Supplier X with regard to
Performance Dimension Y
WY assigned weight for Performance dimension Y
where Σ Wy =1
y= 1
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example
The Electra Company is looking to award a new contract for
500,000 integrated circuit boards (ICBs). In the past, the
company has shared all business equally across three
suppliers, and has amassed a significant amount of
information on their performance history.
The process begins by developing a weight for each of the
criteria used. The sum of the weights must equal one. In this
case, the sourcing team assigned to evaluating suppliers
for the new contract has decided that quality is the most
important criteria, closely followed by delivery and price.
The resulting weights are:
WPrice 0.3 = 30%
WQuality 0.4 = 40%
WDelivery Reliability 0.3 = 30%
Total 1.0 = 100%
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Cont’d..
Performance D S1 S2 S3
Price (Birr) 4 5 2
Quality (%,defection) 5 1 10
Delivery, Reliability 95 80 60
(%)
Price (5-scale) 4 3 5
Quality (5-scale) 3 5 1
Delivery (5-scale) 4 2 1
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Market complexity:
For products with few alternative
sources of supply, selection should be
comprehensive because the possibility
of substitution is low.
For products with many alternative
sources of supply, selection can be
less comprehensive.
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Cont’d….
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