Today, different supplier evaluation methods are available however, the most useful one is PPM (parts per million) metrics. In order to ensure that your supply base is effective and efficient, you must establish methods for evaluating your suppliers. The above-mentioned pressures and changes have forced businesses to look into the ways of managing suppliers. All of the aforementioned things have impacted the ways businesses procure services, components, and materials.
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Furthermore, we have witnessed fluctuations in currency exchange rates and commodities as well as improvements in quality management systems. In the past decade, we have seen regions with low cost labor competing with suppliers in the more ‘developed’ countries. In recent times, businesses have started to pay attention to supplier quality as global sourcing has witnessed more changes in the last decade than ever before. If you do not measure the performance of your suppliers, it will become hard for you to evaluate, penalize, or reward them. A common sight is businesses asking suppliers to shut down production due to faulty products when a month’s supply has just left the sourcing country and is out on the sea.Īs a buyer, it is important for you to know that you cannot demand compensation for any shortcomings if you are not measuring the suppliers’ performance. Today, many businesses are sourcing from geographically distant places as a result of globalization and an increased demand for purchased goods.
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Often businesses fail to acknowledge the ‘real’ influence suppliers have on their quality performance.