buyer power supplier performance

[lokesh.819]

Hi every one,

I would like to know the impact of buyer power on supplier performance? What are the factors that should be considered in order to assess the supplier performance when buyer has the upper hand?


Thanks in advance


Regards,

Lokesh

[Starbucks Junkie]

Originally Posted by lokesh.819

Hi every one,

I would like to know the impact of buyer power on supplier performance? What are the factors that should be considered in order to assess the supplier performance when buyer has the upper hand?


Thanks in advance


Regards,

Lokesh

Lokesh,

It depends on what metrics you are looking at to review, my experience with buyers, and apologies if this seems unfair, is that they are only concerned about cost, and not much else.

If you are wishing to review supplier performance over a broader perspective, you should consider reviewing the following, with a mind to the supplier improving these metrics if the supply contract is to be continued;

Quality,
Supply in Full
Supply on Time
Be committed to continuous improvement programmes
Cost Reduction
Transport Reduction

[lokesh.819]

Thanks for the reply.

Out of my curiosity, i want to ask another question?
Does the relationship affects between the supplier and buyer, if the buyer power helps in improving the supplier/vendor performance?

Thanks,
Lokesh

Originally Posted by Starbucks Junkie

Lokesh,

It depends on what metrics you are looking at to review, my experience with buyers, and apologies if this seems unfair, is that they are only concerned about cost, and not much else.

If you are wishing to review supplier performance over a broader perspective, you should consider reviewing the following, with a mind to the supplier improving these metrics if the supply contract is to be continued;

Quality,
Supply in Full
Supply on Time
Be committed to continuous improvement programmes
Cost Reduction
Transport Reduction

[Starbucks Junkie]

Originally Posted by lokesh.819

Thanks for the reply.

Out of my curiosity, i want to ask another question?
Does the relationship affects between the supplier and buyer, if the buyer power helps in improving the supplier/vendor performance?

Thanks,
Lokesh

Lokesh,

If improvements are made based on buyer invlovment, this should help to cement any relationship between the two, and will be bordering on a strategic partnership.

The only difference will be distribution of power, as power will be more equally shared, although the Buyer will still retain the majority.

[Deepak Arecal]

Hello

Just one thought of mine....

maintaing relationship depends on the product critacality and market condition of the product..
suppose the product is critical and market is not yet sturated then its not worth show the buyer power... then its better to have a good relationship..
if the product is not so critical and highly compitative market then with the buyer power one can exploit the market .. ( can use the e-auction for such product)

better to segement the supplier on the prodcuts then use the buyer power..

cheersssssss
Deepak

[vijayr3]

Hello to Deepak, SJ, & Lokesh (assuming we are buyers here in this thread)
Supplier relationship is really difficult topic, its like relation between women and her mother in law! Everybody works for their own interest and returns, end of the day it all depends what partnership with the supplier we entered into. I know we just enter into service agreements without disclosing everything to them. We then buyer & supplier expect a lot from each other than what mentioned in the initial service agreement. I would suggest we should have sales targets shared in advance and update them constantly for any changes. Its all easier said than done! We all need to run smoothly and like to leave office by 6pm!! A shared business plan and targets would help to solve major issues. If we constantly update the demand of particular SKU to the DC and also to the supplier (if possible) cost can be reduced for the Logisitics, DC and supplier too. This would create more confidence and strengthen relationship. I have also attached a xls template that may help to rate a supplier.

[Starbucks Junkie]

Vijay,

Good attachment, one question however, the grading system seems very open to interpretation for example how would you grade an 8 as opposed to a 9?

What I feel would make this better is to have a guide for each measurement, for example criteria that defines a score of 1, through to criteria that defines a score of 10. This way a user can make the distinction between a score of 8 and a score of 9.

Just my opionion.

SJ

[vijayr3]

Hi SJ
Thanks for the opinion, the number 10 denote very good, 5 for average and 1 for very poor. As you said each grade could be characterized, in large organisations, many team would working with same vendors, it could tell us how different the vendor responds to different departments of the same organisation. An average or the popular score can be taken. I know what you mean. It could work either ways too. The scoring range can narrowed from 1 to 5 instead 1 to 10! I dont know if i make sense here!!

[Starbucks Junkie]

Vijay,

Not quite was I was meaning.

Criteria to suit each level of rating, for example.

A rating of 1 means that a company is doing this, this and this, but not this, this or this.
A rating of 2 means that a company is doing this, this, this, and this, but not this, or this.
A rating of 3 means that the company is doing this, this, this, this and this, but not this.
etc, etc

The criteria does not need to be match perfect but generic across what should be expected of a supplier.

This would act as a guide to the user when rating a supplier rather than just assuming that becuase this supplier seems better then the next it should be rated a 6 as opposed to a 5.

Does this make sense.

SJ

[vijayr3]

SJ,
Thats really a great idea, i never thought from this way! thanks! Actually a friend of mine did a scoring project on VB using option buttons which was very similar to this..
My essay is almost ready for competition! will post it soon!!