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Key performance indicator (KPIs) for suppliers

Discuss about the Developing Long-Term Voluntary Partnerships With Suppliers.

These are factors observed to show the competence of the suppliers on the delivery of the services. These factors serve to guide in deciding the supplier to keep and supplier to avoid (Khamseh, 2017, p.1032).

  • Good and services fit for intended purposes
  • Supply in time
  • Compliance to stated specifications
  • Free from the damages
  • Delivery in full
  • Manageable risk
  • Ability to respond to needs.

Suppliers are valued since it is a rule that company needs the same way they relied to the company (Secundo, 2017, p.43). A vivid relationship with suppliers is maintained through the following ways.

Paying the suppliers in time.-Payment is made within the 48 hours of the order placement. Payment is made using the authorized mode provided by the supplier. Suppliers should be informed when the payment is credited to their accounts. Doing this helps maintain a good relationship with the suppliers by avoiding disputes that may arise as a results of delay payments (Hartley, 2017, p.78)

Through sharing of the information-Trusted suppliers are kept aware of the business taking place in the company. They are frequently invited to confirm how their supplies are being used in the firm. This help to develop a trustworthy relationships hence improving delivery of the services (Ravindran, 2018, p. 67)

Through a satisfactory lead period-A lead time of 7 days is provided to the supplier in between the placement of the order and the delivery of the good and services. Suppliers are required to honor this promise for the smooth operations of the firm.

The contract comprise all the agreements for the parties considering the subjects of concern. Both the parties entering into contract should comply with the laid agreements (De Boer, 2017, p.67)

  1. The company is mandated to pay any outstanding sum to the supplier as per the agreement between the company and suppliers.
  2. Supplier is mandated to pay all outstanding payments as per the agreement laid between the parties
  3. Supplier must provide complete quote in written form within 12 hours upon request for the pricing or per the agreed terms and conditions. Failure to this the contract is deemed null and void.
  4. Invoice is paid within 48 hours upon the receiving the invoice. Communication will be made upon the delay and the company will be liable to any damages associated to the delay.
  5. Payment from the company are directly transmitted electronically to the supplier accounts. No cash payments whatsoever is allowed and any risk associated to cash payment will not be tolerated.
  6. Suppliers should inform the company in case of any disputes or claims within the 4 days of due reception.

Suppliers information is filled in the suggested excel as indicated above. This information is analyzed over a period when the supplier is supplying to the company. Information is compared against the key performance indicators. This helps to know which supplier to keep and which one not to keep (Jaggi, 2017, p.103). The score card in this case ranges from 1 to 10. Supplier who score below 5 is considered below average whereas the one in between 5- 7 is considered fair and can be kept if competition for tender is not stiff. Supplier who score above 8 is considered excellent and is kept. This is the supplier who honor the agreements and also satisfy most of the indicators for performance (Odegaard, 2017, p.56).

Supplier evaluation is used to assess and improve the current and future potential suppliers through a number of assessment and evaluation. Basing on the template, the evaluation is important in to monitor and measure the performance of the suppliers in order to reduce the cost associated to the activities (Bonn, 2017, p.34). This also involves analyzing risk management and trying to maintain the scope of progressive improvements in the selection and rewarding of the suppliers.

Good Relationship Strategies

In addition to the KPIs used in the template, suppliers are evaluated based on different criteria.

Competence is one of the factor that is used to assess suppliers. This involves the efforts the supplier is putting in the aim to achieve the target.

Capacity of suppliers is evaluated to test the levels of the delivery that supplier can achieve within the specified period of time.

Supplier evaluation template serve to guide assessment of performance for supplier. It enable the company to have a clear view of the current suppliers and also project the performances in the future years (Nieman, 2017, p.39). Reward of the tender to supply certain goods and services is determined by the previous behavior and compliance to the agreement (Sheoran, 2018, p.89).

Suppliers are assessed with an aim of predicting the trend in the future. Room is given for the suppliers who tend to improve over the time. Suppliers who completely fail to comply with the codes of business are not given the contract (Hugos, 2018, p.67). Those who comply with the code of conduct and agreement are rewarded the contract and the company play its best to maintain a good relationship. Supplier management portfolio if managed well can leads to huge benefit to the organization by ensuring the right supplier is select on the merits basis (Lewis, 2017, p.43)

Template for assessing good and services delivered tend to change and modified over the time to suits the specifications requirements.  The contract for supply is entered between the organization represented by the authorized person and the supplier represented by authorized named person (Moffat, 2017, p.53). The supplier approve to provide the services in accordance with the terms of agreements.

Supplier approves to deliver the goods and services firmly in harmony with the conditions and price agreed. Following is the table with details specifications on good and services delivered.

S. no

Contract descriptions

Budget quotations

Quantities

Units

Unit per price

Total

Good must or shall be delivered as agreed in the supplier agreement clause of this document. Cost of delivery is assumed to be included in the price specified earlier. In the case of the breach of this terms the offender risk the rights to;

  • Termination of the contract with no any liability. This will be done through provision of immediate notice and pick of another supplier.
  • A penalty of 0.6% of the total contract cost for every single day of delay or breach of the delivery agreement.

Emails to supplier indicating satisfaction with the process.

This kind of email is official and its tone should carry satisfaction for the process.

Dear Todd,

Thank you for the delivery. On behalf of this company I appreciate the huge efforts you put in delivering of this consignment.

Supplier terms and conditions

We understand clearly the sacrifices you put to deliver and make everyone here happy. This is a commendable job and we look forward to working with you in the near future.

Thank you.

 Logistic manager

This kind of email is official and its tone should carry satisfaction for the process.

Dear Joseph,

On 7th May 2018 you supplied twelve tonnes of sugar in to the company in response to the order SU/52018. The invoice for this order was paid 48 hours after the delivery of the last consignment.

Unfortunately, the samples taken from this consignment has indicated high moisture content and coliform counts much more than the required specifications agreed on the agreement. This is to express our dissatisfaction to you for breaching the contract. To solve this, we would appreciate if you replace this consignment with our specifications or else refund the payments with 0.6% penalty. We look forward to receive your views on delivery,

Thank you

Logistic manager

Email to supplier requesting on meeting.

Email to suppliers should be official and polite. Words that can suggest otherwise should not be applied. Below is an example

Dear Jennet,

Considering the supply you made on 13th May 2018, we would like you to avail yourself to clarify over some issues concerning the second batch of supply. Four of the eight cartons supplied do not have the mark of quality stamps. This provide a challenge because we are not sure whether the cartons are counterfeit or they are valid.

Kindly, come to our office within 72 hours. We look forward to hear from you soon.

Thank you.

Logistic manager

A number of ways can be used to manage disputes with supplier. This is done procedurally to ensure both parties are satisfied.

Keeping of the records.- this provide references on the transaction modes and going through the record help to establish basis of conflict resolution.

Listening keenly to the complainant- being empathetic and listening to the suppliers helps to understand what is being complained. This help to decide whether to give in to their demands or to avoid them depending on the previous agreement.

Referring the fact in the contract- this provide a clarification on the basis of the disputes among the two parties. To sum up the procedures for dispute management, four steps are followed (Moffat, 2017, p.89)

Establishing a contact with supplier- This is the first step that involve contacting the supplier keeping the records of the important conversations. It involves keeping records on the negotiations and agreement for use in the future (Mehmood, 2017, p.76)

Supplier Evaluation Template

Presenting the supplier with a letter of complaint-This decision is arrived when the direct contact with the supplier is unavailable. The letter sketch the problem and all the relevant references of the contact (Lewis, 2017, p.67)

Support from the industry union.-Associations can help when I come to dispute resolution. It provide consultant and advisory services and also present their members in court when it come legal matters (Sheoran, 2018, p.87)

Dispute management through resolution authority.-This is sorted if all the other methods have proven to be unable to resolve the problem. A good example of authority is Master Builders Association which offers the services in Queensland and New South Wales (Bonn, 2017, p.34)

Avoidance of the disputes from the supplier.-Strong relationships with supplier can help a lot in the avoidance of disputes. Disputes can be very consuming in terms of the resources and should be avoided in all means possible (Moffat, 2017, p. 89). Despites putting measures to avoid disputes, they always arise in the business. example of the disputes that were solved include; The supplier of the sugar complained that there was no any payment to their accounts when in real sense the finance department had wired payment in the last 24 hours. This problem was analytically analyzed and found to be caused by the bank instructed to credit the supplier account.

Dispute arisen also as a results of late delivery of the good and services by the supplier. This is investigated and the supplier is found being negligence. The problem is solved through giving the tender to another supplier who can manage the delivery.

It aims at getting current state of the suppliers already servicing to the company. This help to award to give privilege to the companies that indicate exemplary performance and improvement in the honoring the agreement. This helps in ensuring a fair competitive environment and excellent relationship and loyalty. Rewarding of the suppliers involve a series of steps; Design and publication of the award package for suppliers. Formation of the principles for evaluation selection protocols. Creation of the rewards by nature and worth. Establishment the time for launching the process to award. Elevation for supplier accolades package. Choosing of proper award ceremony. And finally provision of an extensive publication of the suppliers winning. This involves selection of the important suppliers, supporting them and provide chances to improve their businesses.

Address

Dear Michael,

Ref; Review of the outcome.

Suppliers Assessments

It is with great honor to inform you the review on the contract TG/F1/18 outcomes will be on 19th May. There is no any further action pertaining the review is needed at the moment.

Thank you so much for participating in the process

Yours sincerity,

Anderson

Address

Dear Sir,

Ref; Recommendation

It is with pleasure to recommend Tyco limited as the recipient of the supply for the CCTVs. Basing on the review outcomes, the company has expressed exemplary capabilities to deliver the services at the considerable cost. The company has achieved positive outcomes for the last few years and stands being the best out of all the companies evaluated.

Yours respective,

Anderson

Conclusion

Cooperation of the company and suppliers is very important. It is based on the common goals and the work improvement is the main target. Supplier evaluation provide an opportunity to measure the requirements and qualifications that help in the development of the suppliers. Through a clear cooperation, a fair and competitive environment to strengthen the relationship is established. Supplier assessment helps in the supplier selection protocols and continuous monitoring of the suppliers to enhance services deliveries.

References

Ayers, J.B. and Odegaard, M.A., 2017. Retail supply chain management. CRC Press.

Cho, M., Bonn, M.A., Giunipero, L. and Jaggi, J.S., 2017. Contingent effects of close relationships with suppliers upon independent restaurant product development: A social capital perspective. International Journal of Hospitality Management, 67, pp.154-162.

De Boer, L., 2017. Procedural rationality in supplier selection: Outlining three heuristics for choosing selection criteria. Management Decision, 55(1), pp.32-56.

De Villiers, G., Nieman, G. and Niemann, W. eds., 2017. Strategic logistics management: A supply chain management approach. Van Schaik Publishers.

Huan, S.H., Sheoran, S.K. and Wang, G., 2004. A review and analysis of supply chain operations reference (SCOR) model. Supply Chain Management: An International Journal, 9(1), pp.23-29.

Hugos, M.H., 2018. Essentials of supply chain management. John Wiley & Sons.

Lewis, T., Liu, F. and Song, J.S., 2017. Developing long-term voluntary partnerships with suppliers to achieve sustainable quality.

Lin, C.K. and Moffat, P.A., 2017. Global Supply Chain under the Paris Agreement: The Relevance of Chemical and Product Regulations. Natural Resources & Environment, 31(3), p.21.

Mehmood, T. and Khodabandeh, F., 2017. Ranking suppliers by using the Sustainable Supplier Evaluation Criteria (SSEC) and Multi-Criteria Decision Making (MCDM) methods.

Merzifonluoglu, Y., 2017. Integrated demand and procurement portfolio management with spot market volatility and option contracts. European Journal of Operational Research, 258(1), pp.181-192.

Rushton, A., Croucher, P. and Baker, P., 2014. The handbook of logistics and distribution management: Understanding the supply chain. Kogan Page Publishers.

Sawik, T., 2017. A portfolio approach to supply chain disruption management. International Journal of Production Research, 55(7), pp.1970-1991.

Secundo, G., Magarielli, D., Esposito, E. and Passiante, G., 2017. Supporting decision-making in service supplier selection using a hybrid fuzzy extended AHP approach: A case study. Business Process Management Journal, 23(1), pp.196-222.

Swink, M., Melnyk, S.A., Hartley, J.L. and Cooper, M.B., 2017. Managing operations across the supply chain. McGraw-Hill Education.

Torres-Ruiz, A. and Ravindran, A.R., 2018. Multiple criteria framework for the sustainability risk assessment of a supplier portfolio. Journal of Cleaner Production, 172, pp.4478-4493.

Webb, J., 2017. What Is Supplier Relationship Management.

WONG, C.B., WONG, K.L.K., NG, H.C. and CHOU, C.P., 2018. Rewarding and Punitive Switching Barriers in a Continuous Purchasing Setting: The Impact of Relationship Age.

Yu, C., Wong, T.N. and Li, Z., 2017. A hybrid multi-agent negotiation protocol supporting supplier selection for multiple products with synergy effect. International Journal of Production Research, 55(1), pp.18-37.

Shafiq, K., 2017. SUPPLY CHAIN MANGEMENT, TEXT AND CASES BY: VV SOPLE. Pakistan Business Review, 17(3), pp.725-730.

Mohammadzadeh, M., Khamseh, A.A. and Mohammadi, M., 2017. A multi-objective integrated model for closed-loop supply chain configuration and supplier selection considering uncertain demand and different performance levels. Journal of Industrial & Management Optimization, 13(2), pp.1041-1064.

Ammar, S.B., Loukil, T. and Dhiaf, M.M., 2018. Multi-criteria approach for assessing the logistics performance of industrial purchase: empirical study of Tunisian manufacturing company. International Journal of Applied Management Science, 10(1), pp.44-58.

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