Supplier Selection Report

A well-versed Chief Executive Officer is imperative in any organization. A CEO should understand and know all areas of business and supply in their organization to develop strategies that are at per with the company’s goals. The case scenario indicates that the CEO’s task is in finding a competent supplier of muscles from turkey legs, hearts from pigs, alligator claws, corn leaves, and kelp from the Chesapeake Bay. The CEO must widely research on different suppliers as well as their pros and cons. The evaluation of suppliers is also essential to ascertain that they provide high-quality goods, are fast in delivery, and have relatively low prices. The CEO must assess the potential of the suppliers and determine whether their capabilities are in sync with the organization’s goals. It is also imperative for a CEO to decide whether the company requires multiple suppliers or having an agreement with a single, long-term supplier. In this essay, an in-depth analysis of supplier evaluation occurs.

Supplier Location

Due to globalization and an increase in economic competition, companies opt for international relationships. Thus the CEO would research suppliers from different countries. Furthermore, since the organization deals with the purchase of plants and animal parts, they would prefer suppliers from countries where these commodities are of higher quality. According to Monczka, Handfield, Giunipero, and Patterson (2015), supplier location includes the evaluation of suppliers based on availability, quantity, service provision, support, reliability, pricing, and selection. A CEO analyses different suppliers through technical or company publications, catalogs, trade journals, and directories. One would also research the company’s reputation and history. To determine which suppliers are willing to supply to the organization, the CEO could advertise to appeal to distributors and solicit bids. During meetings with suppliers, the CEO assesses the products, their qualities, the distributor’s capabilities, and communication efficiency. Here, the CEO becomes more aware of potential suppliers for their commodities. He or she may place orders with the suppliers that meet the company’s requirements (Monczka, Handfield, Giunipero, and Patterson, 2015).

If the CEO fails to undertake an in-depth location of suppliers, he may face several difficulties. First, the suppliers may not meet the organization’s requirements. Besides, the supplier may avoid communication on delays and faulty products, thus inconveniencing the organization and its customers. Since some of these commodities, like hearts from pigs, are perishable, delays on their supply due to miscommunications with distributors may lead to massive losses by the organization. Therefore, without performing a proper background check on the suppliers, an organization would incur high costs and damages.

Assessment of Supplier Capability

All organizations prefer suppliers that meet requirements and whose future goals align with the company’s vision. CEO’s may use the Key Performance Indicators (KPI’s) in supplier assessment. KPI’s measure material suppliers’ performance to reduce costs, control quality, and ensure effective results (Fedele & Dolan, 2004). Here, organizations should understand their products to determine whether they are direct or indirect. This determination is essential as KPI’s differ primarily in the assessment of direct product and indirect product suppliers. The products in this scenario are direct because they have an immediate impact on the consumers. KPI’s evaluate a supplier’s relevance to a company by assessing his or her performance in comparison to the organization’s requirements. The process measures the supplier’s performance and takes note of their improvement or lack thereof. It also molds supplier improvements to coincide with the organization’s expectations. Finally, KPI’s strengthens and work on improving supplier relations, justifies a supplier’s significance in an organization, and reward improvements in supplier capabilities (Fedele & Dolan, 2004). KPI’s not only assess a supplier’s skills, but also leads to gradual increases in quality delivery and prices.

Apart from using KPI’s, one could also classify suppliers according to their potential. The two standard classifications are; full and associate partnerships. Full partners are suppliers that meet all the organization’s expectations while associate partners require more capabilities to meet organization requirements. There are also high risk and incapable suppliers that organizations shun for fear of loss. Full associates are beneficial as they demonstrate fast deliveries and responses, are honest and efficient, do not collide with the organization’s expectations, and are innovative. High risk and incapable suppliers offer no benefits to the organization and are volatile and unpredictable (Assembly, 2001).

Evaluation Criteria for Suppliers after Acquiring Partnership

Mind Tools (2020) states that ten C’s are critical in the evaluation of suppliers. This criterion provides an organization with a broader understanding of a supplier’s efficacy and potential. The ten C’s are inclusive of capacity, competency, culture, commitment, control, cash, cost, consistency, clean, and communication. The CEO in the case scenario ought to analyze the competence (capabilities and effectiveness) of all the suppliers in the five different commodities and ensure that they are compatible with the organization’s requirements. Capacity means that the supplier provides enough quantities of commodities to the purchasing organization. The supplier shows commitment to the provision of high-quality products to the organization. The supplier’s policies or the supply contracts show their commitment to their clients. Fourthly, the supplier must have control over their supply policies. Some countries and states may widely restrict suppliers in the quality and quantity of commodities supplied. Therefore, the CEO’s should ensure that their supplier’s jurisdictional laws do not interfere with supplies. Fifthly, a supplier’s finances (cash) must be legal and stable. The cost of products and services provided by the selected supplier should be relatively cheaper than those of other suppliers. A supplier must be consistent, clean, and have cultures that align with the organization’s to avoid conflict (Mind Tools, 2020).

Multiple Verses Singular Long-term Suppliers

Choosing the length of the supply period and the number of suppliers is essential to all organizations. A CEO should consider the products they require and evaluate the benefits and disadvantages of having centralized or decentralized suppliers. Monczka, Handfield, Giunipero, and Patterson (2015) assert that centralized purchases have significant advantages. Singular suppliers have lower costs hence lead to cost-effectiveness, enhance partnerships between buyers and suppliers, increase commitments and willingness to invest in technological opportunities, and reduces the risk of theft and opportunistic behaviors. Multiple suppliers provide broad options for commodities and increase competition among suppliers.

However, numerous suppliers are largely disadvantageous to the purchaser since suppliers have less incentive to match organizational requirements. They are also expensive due to making different orders and picking commodities from different terminals. Therefore, the CEO in this organization, just like many others, would prefer singular, long-term suppliers.

It is necessary for a CEO or supervisor in charge of an organization’s supply chain to undertake extensive research on capable suppliers. Factors such as the perishability and urgency of the goods also play a significant role in making such decisions. In such a scenario, the CEO needed suppliers who have a proper packaging for perishable products and make fast supplies. Picking an adequate supplier is not only cost-effective but also provides room for organizational growth.

References

Assembly. (2001)How to evaluate suppliers. Retrieved from https://www.assemblymag.com/articles/82672-how-to-evaluate-suppliers

Fedele, K., & Dolan, T. (2004). KPIs: Measuring indirect material suppliers and service providers. Institute for supply management, Retrieved from https://www.instituteforsupplymanagement.org/files/Pubs/Proceedings/BBFedeleDolan.pdf

Mind Tools. (2020). Carter’s 10 C’s of Supplier evaluation. https://www.mindtools.com/pages/article/10-cs.htm

Monczka, R., Handfield, R., Giunipero, L., & Patterson, J. (2015). Purchasing and Supply chain management, 6th Edition. Boston, MA: Cengage Learning