8/11/2019 Purchasing Notes Chap 8
1/2
Purchasing (BMK3748) Diploma in Business Management
1 | P a g e
Chapter 8: Sourcing for Consumables, Capital Goods, Good for
Resale
Key Supplier Performance Indicators
Direct measures quantify supplier performance at the time work
is completed.
Examples: on time delivery, number of rejects, and cycle time to
develop a specific product/service/ technology in a development
stage.
Automation of real time metrics such as quality, quantity,
price, and on-time delivery
measures and careful selection of more time consuming data
collection activities help to
reduce the time spent measuring results.
Supplier score card
Summary statement of the suppliers cost, quality, and timeliness
performance and a
compilation of satisfaction surveys, real time metrics, variance
of invoice amounts to
estimates or contract negotiated rates and other contract
related terms.
Categories of Supplier
a)
New supplier
Is one about no track record is yet available.
A supplier new to the buying organization and in the process of
attempting to meet its
obligations under its first contract.
Can be considered probationary and will normally be watched
closely to ascertain
whatever pre selection expectations warranted awarding the
business.
b)
Current/long-term supplier Already proven in the past that their
performance meets minimum expectations.
The evaluation of their performance may be more routine.
1. Sole Source
A situation whereby only one source is capable of meeting the
buyers need - then, you have
a sole source situation.
The exact opposite of open competition.
A result of a government-created monopoly, such as local
utility, and there is little the buyer
can do to gain concession. In this kind of situation, there is
formal oversight by some governing body to ensure
customer get fair treatment.
2. Single Source
Similar to the sole source but is a condition created by the
buying organization, either trough
product customization where only one supplier is capable of
producing the product or
through some predefined collaborative relationship that by its
nature excludes competition.
The supplier may be the exclusive owner or certain essential
patents or processes and,
therefore, be the only possible source.
