Relationships In Supply Chain Management Essay

1726 words - 7 pages

Procurement is a very important process in a Supply Chain, a firm, whatever it's newly founded or highly developed, will have the procurement process. Procurement process is related to suppliers, and there are many relationships between the firm and suppliers. So being a Supply Chain Manager, have an excellent managing of the relationships between firm and suppliers will be very important. Sometimes, the existing suppliers can't offer the parts that the firm need for the newly developed products, so the firm need seek a new supplier, and this circumstance relates to the supplier evaluation and selection process. A good new supplier will give the firm many advantages such as lower cost, higher quality. I think the interorganisational relationships are very important in the supplier evaluation and selection process. The following essay will talk about the new supplier evaluation and selection process, three different types of relationships and the factors of choosing a relationship.A new supplier evaluation and selection process should measure a lot of factors of a supplier. According to Stock and Lambert (2001), there are 12 keys should be measured: 1. Price effectiveness, this key is used to determine the price in procurement; 2. Cost savings, this key is used to make sure the cost is as low as possible; 3. Workload, which is a measurement of workload of new imported, current and completed; 4. Administration and Control; 5. Efficiency, this key presents the number of inputs related to the number of outputs; 6. Vendor quality and delivery, it will measure the percentage of accepted purchasing items and the quality of delivery; 7. Material Flow Control; 8. Regulatory, societal, and environmental measures; 9. Procurement planning and research; 10. Competition; 11. Inventory; 12. Transportation. In these 12 keys, I think the most important keys are the price effectiveness, cost savings and vendor quality and delivery. Because these 3 keys directly related to the cost of procurement, which is the thing that every supply chain manager should pay the most attention on. When the supply chain manager start to select a new supplier, the first thing that will be considered is what the firm need to buy, and whether the new supplier supply it or not. Then the price and cost should be considered, the firm surely wants a good price and low cost. After these, the rest of the keys have to be measured. Selecting a new supplier is a very important process for a firm, and an excellent decision will bring the firm more profit and opportunity in competition.The basic interorganisational relationship is transactional relationships. This relationship is similar as our daily shopping. It is an independence relationship, buyers and suppliers work separately, and the information such as cost, data and forecasts are not shared. The main focus of both parties is the price, so the best prices they can get is the best result of the transaction, and not consider other party's...

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