Organizing and managing multiple suppliers
Starbucks is a coffee company that deals with providing coffee drinks and products in its dispersed chain stores. Considered the leading provider of second wave coffee, Starbucks’ products are distinguished for their taste, customer satisfaction ratings and quality (Sacks 2014). With a big market capture production is inevitably high which in turn leads to high supply of the needed materials. Due to the ranging chain stores in different parts, the procurement department needs to have rigid procedures for efficient purchasing and supply management. A good costs and quality consideration PSM practice translate into positive financial outcomes (Evi, Dietar & Michael 2011). Major competitors and operators in the same industry include Costa Coffee, Nescafe and McDonalds. Bearing in mind the fact that in supplier performance assessment procedures quality is of more emphasis than the quantity. Three steps should be followed in a full supplier performance which are; supplier performance scorecards, Supplier performance measurement and supplier contract management. The following are a few tenets of creating efficient scorecards;
Scorecards that revolve around the business goals.
How suppliers can elevate the objectives of the company is crucial in any assessment related to business goals. It helps determining whether these suppliers are complementing the business or not. They can follow up strategies as; reducing risks and costs of supplies, calculating additional value from individual suppliers, illuminating hidden costs and risks and unveiling performance betterment opportunities.
Evaluation of performance of the suppliers
Performance metrics should be present in an organization aiming to have a suppliers’ assessment exercise. The performance metrics should be per supplier and should be aimed at awarding the best performing or laying-off the underperformers.
Sharing information with the suppliers.
Effective scorecards should be able to share info collected based on the performance to the suppliers (Forstl, Mathies & Kai 2011). This move is aimed at helping the suppliers evaluate themselves and improve on the areas they have underperformed. With the development in proper communication tracts, the ways in which the two parties dialogue is improving. Better platforms have been created to aid in communication like Supplier Performance Management (SPM) applications (Koploy 2011). Information sharing is crucial in times of financial strain of the supplier because at times like that it can start cutting back its supplies irrespective of contract agreements. Intel like that is important so that the buyer (Starbucks) can be able to look for alternative supplier options.
Information sharing with the stakeholders.
In assessment of suppliers, transparency should be highly maintained mostly between the operations and the body that owns the company. The pinnacle body of the organization should be aware of the ratings of the suppliers. Suppliers play a vital role in any organization therefore, information concerning them should be clearly revealed to the management body. The trends in supply are very crucial in financial projections of any business corporation because they shed light on the state of the products side of the national income (Kohli 2003).
Advantage of certifying of suppliers.
One major importance of certification of suppliers is for assurance purposes. Goods the supplier provides should be well produced. A certified supply is one who has already passed the test of having a good history of products that are of high production standards. Transportation standards too are of the essence for example coffee requirements in Starbucks because they are ingestible products therefore, a good hygiene standard should be observed while transporting. Certified suppliers have adequate process controls and have proof that promotes the fact that their products are consistent, meet requirements, authentic, well-labelled and most importantly of good quality. With a certified supplier, a business can be able to rely on the quality of its products because it all starts in the raw-materials it has used.
Various indicators in performance assessment are used that are based on mostly the quantity, quality and efficiency. The following show a couple of the indicators.
Directional indicators- they go hand in hand with the link between performance assessment and goals of the business.
Executable indicators that are majorly used to effect change in the operations and duties played by the suppliers.
Financial Indicators that are for projections measurements. Specific examples of the various performance KPIs Percentage of supply defects. Take the total number of defective supplies divided by the total supplies in a specified time period and company.
Rejection rate which measures the number of defects recorded for a supplier over a certain timeframe.
Availability ratio- an analysis on the responses of the suppliers when given an order.
Mean time to repair refers to the time taken for a supplier to resupply after a defect has occurred.
Providing Feedback.
A positive feedback will be aimed at appreciating a good job done by the suppliers. It can be given out in the form of revealing impressive quantitative indicators to the suppliers. Rewards can form part of the feedback process whereby awards can be given out to the various suppliers. The growth of the business as a cause of the suppliers can be done so as to show suppliers their importance in the business. An overall economic impact of the business should be done to show the suppliers their efforts in raising the standards of the economy. The feedback can be vice-versa too whereby the suppliers can be informed of their bad performances with the aim of making them rethink their services.
Conclusion
Performance of suppliers does not necessarily reflect to the retail performance boost but to the individual company growth ( Hofer et al. 2012). Having to consider a number of suppliers due unreliability of supplier or scale of operations is a common sighting for big corporations like Starbucks. However, with a good mix of performance management exercises Starbucks can extinguish the kind of suppliers present and the ones that are better suited for contracts.
Bibliography
Christian, H, Henry, J, David, S, Mathew, W & Brent, W, 2012. The Impact of Key Retail Accounts on supplier performance: A colaborative perspective of resource dependency Theory.. Journal of Retailing, 3(88), pp. 412-420.
Evi, H, Dieter, K &. Michael, H, 2011. Top and bottom line relevence of purchasing and supply management. Journal of Purchasing and Supply Management, Issue 18, pp. 22-34.
Forstl, Mathies, P & Kai, 2011. Achieving purchasing competence through purchasing measurement system design - A multi-case study analysis. Journal of purchasing and supply management, Issue 17, pp. 231-245.
Kohli, U, 2003. GDP Growth Accounting:A National Income Funtion Approach. Rev Income Wealth, 49(1), pp. 23-24.
Koploy, M, 2011. Best Practices to improve supplier perfomance scorecarding, Texas: Software Advice.
Sacks, D., 2014. The Multimillion Dollar Quest to Brew The Perfect Cup of Coffee, s.l.: Fast Company.
