question archive Case Study: The supplier selection process is a critical activity within the operations of a company
Case Study: The supplier selection process is a critical activity within the operations of a company
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Case Study: The supplier selection process is a critical activity within the operations of a company. Once the outsourcing decision is taken, a process aimed at analyzing and choosing the appropriate suppliers begins.
Suppose that you are a Procurement Analyst in a large company. You have been asked to create a proposal to the Chief Procurement Officer identifying the best supplier to outsource, for a 3-year period, a complex part of your company’s value chain. Your company operates in a mature market where the qualifying and winning factors are quality and time to customer respectively.
Based on the information included in the table, address the following questions:
What supplier would you select?
What is your rationale for your election?
What supplier would you select if your company’s factors changed to price and quality? Would your election change?
|
Supplier |
Price |
Quality |
Delivery |
Others |
|
A |
90 |
90 |
95 |
Overseas supplier |
|
B |
105 |
100 |
100 |
Supplier facing financial issues |
|
C |
85 |
85 |
95 |
Proximity supplier |
*Figures are expressed in % as follows:
Price: price quoted by supplier vs. outsourcing company target price
Quality: parts accepted vs. parts delivered
Delivery: parts delivered on time vs. parts delivered
Provide a proposal, as the Procurement Analyst, that outlines the issues of the case, states your choice of supplier and provides a rationale for your choice.
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Answer:
- We would select supplier B because supplier B meets or scores 100 out of 100 in Quality and Delivery parameters.
- Quality & On time delivery are two prime factors and are extremely important for existance of our organization in the market.Since Supplier B meets both the parameters therefore we will select them.
- If the company’s factors changed to price and quality we would lik to change the supplier. We would prefer supplier A among others. We would not consider supplier B because they are having the highest cost parameter and they are facing financial issues. We would also not consider supplier C because they are having low score in Quality though having low price score. Low quality parameter of supplier C may bring down the reputation our organization and reduce customer satisfaction due to quality issues.
