Suppliers play a key role in the performance of various firms. Supplier assessment is a process involving evaluation of available suppliers and selecting the best through both quantitative and qualitative assessments. The process can be conducted on both new and existing suppliers for purposes of performance improvement, cost reduction as well as risk mitigation (Gordon, 2008, p.232). Supplier management involves managing the relationship subsisting between the organization and its suppliers for purposes of maximizing the benefits arising from this relationship. This paper therefore focuses on supplier assessment and selection as well as methods so managing the relationship between suppliers and firms. Policies regarding insourcing and outsourcing will also be addressed.
The process of assessing and selecting suppliers is normally conducted by the purchasing department of an organization being one of the steps in the purchasing process. The process comprises of four steps, problem definition where the material needs of the company are identified, criteria formulation is the next step involving formation of methods to be used in selecting and evaluating suppliers through the gathering of information relating to supplier’s finances, technology, production capacity, human resources as well as quality using methods such as questionnaires, site visits and interviews. The third and fourth involve shortlisting of qualified suppliers and the selection of the best supplier from those shortlisted respectively (De Boer et al, 2001, p.79- 89). Approved suppliers will then be added to the organization’s Approved Supplier List (ASL) and can continually be reevaluated to measure their performance.
Supplier management aims at developing mutual relationship between firms and suppliers for innovative purposes as well as gaining competitive advantage. This can be done through negotiation of contracts between a firm and its suppliers, procuring supplies, allocation of services such as logistics as well as delivery and working together to establish a certain product design . Supplier management entails earning the trust of suppliers through establishing honesty in communication and involving them in the firm’s processes. Some organizations today have come up with strategies that ensure the sustainability of the supplier long-term relationship. These strategies include on time payments, organizations today ensure they pay their suppliers on time for them to be able to sustain their operations as well. Secondly, use of technology in establishing a system that allows the firm as well as its suppliers to view activities, identify risks as well as mitigating them. Thirdly, creation of supplier summits to bring together the company’s suppliers to take part in the firm’s strategic planning. Companies are also involving suppliers in their design process as a strategy to improve the quality of products. Last but not least, organizations have created a collaborative environment as well as processes that ensure supplier audits as well as compliance (Gordon, 2004).
In relation to Starbucks, supplier evaluation begins with information gathering relating to suppliers which is done mainly by the purchasing department as well as other stakeholders. Using the information obtained about suppliers, suppliers are evaluated and qualified suppliers shortlisted. The best suppliers are then selected from the list and given tenders to supply the company’s needed product. The company also ensures it maintains a good relationship with its supplier using the above mentioned methods (Starbucks, 2016, p.1)
Global sourcing involves sourcing of goods and services across all the continents of the world. Its benefits include obtaining skilled labor at reduced cost, reduced cost of raw materials, lesser trade tariffs as well as tax breaks (Monczka et al, 2005, p. 305). At Starbucks, global sourcing has been embraced given that the company has multiple branches in several countries. This is illustrated by its ability to obtain coco beans from one country and milk from another country. The company is also able to distribute its products to its customers across the world at reduced costs.
Insourcing involves producing products or services within the organization for purposes of utilizing the available production capacity, preserving production secrets, ensuring compliance or if its consider beneficial for a company to insource while out outsourcing involves contracting out an organization’s secondary activities to another specialist company for purposes of saving cost, quality, lack of expertise and lack of enough production capacity (Olive, 2004, p.19- 20). Starbucks is to outsource its customer feedback call centre operations to Sitel located at Albuquerque, New Mexico by September due to increased growth of both the company and number of customers. The company owns six roasting centers where its coffee beans are prepared then supplied to other branches worldwide. The company has one logistic system and the coffee beans used comes from Asia, Africa as well as Latin America to the United States and Europe.
In conclusion supplier assessment and selection is important for the success of any firm. Hence firms should embrace such processes and pick the best out of the best for their success. They should also ensure they maintain a good relationship with them to avoid disagreements that might lead to losses.
Bibliography
Gordon, S. R. (2008). Supplier evaluation and performance excellence: a guide to meaningful metrics and successful results. J. Ross Publishing. P.232. ISBN 978-1-932159-80-6.
De Boer, L., Labro, E., Morlacchi, P. (2001). A review of methods supporting supplier selection. European Journal of Purchasing and Supply Management, 7. p. 75- 89.
Gordon, M. (2004). Negotiating and managing key supplier relationships.
Monczka, Trent and Handfield. (2005). Purchasing and Supply Management. 3rd ed. Thomson South- Western. p 304.
Olive, B. (2004). “Outsourcing Growing Despite Controversy.” Power: 148(4). 19-20.
http://www.starbucks.com
