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Critical Factors that Influence Supplier Selection - Essay Example
Pages 3 (753 words)
Three critical factors that influence supplier selection Introduction Corporate ventures involve interdependence of parties towards achievement of business objectives. Most organizations, at any level of a supply chain, either derive their raw materials from others or supply materials to other parties…
Capacity Capacity refers to a subject’s potential to meet particular expectations. An organization within a supply chain has demands to meet and requires necessary and sufficient supplies to meet such demands. As a result, a supplier’s ability to meet required capacity in delivery is of great importance. A good supplier should therefore be one that is able to deliver orders according to quotation’s specifications and one that is flexible and can adjust to emergency needs for high quantity deliveries. Evaluating a supplier’s capacity should therefore look into the suppliers supply chain personnel’s competence as well as its production capacity and normal stock level in order to guarantee continuity in supply.1 A supplier’s capacity to deliver however goes beyond deliverables to long-term factors such as “financial capability, market share, personnel capability, process capability, and top management capability”.2 Financial stability, demonstrated by suppliers’ financial ratio analysis for example identifies a suppliers’ potential to guarantee a ‘long-term ‘contracts for supplies. ...
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