Supplier evaluationfor achieving long-term performance - Essay Example

outside the business then it follows that the biggest opportunities for improvement in their cost position will also be found in that wider supply chain (Christopher, 2005). Having the right suppliers ultimately makes a significant difference to an organization’s future in reducing operational costs and improving the quality of its end products, whereas having the wrong suppliers can cause operational and financial problems (Zeydan, Colpan and Cobanoglu, 2011). This has led firms to focus on improving their supply chain by continuously evaluating the performances of their suppliers.

To achieve this, firms are increasingly building collaborative relationships with partners in their supply chain in order to achieve efficiencies, flexibility, and a competitive advantage (Whipple, Lynch, and Nyaga 2009). Such a relationship which involves collaborative activities, such as information sharing, joint relationship effort, and dedicated investments leads to trust and commitment. Trust and commitment in turn lead to improved satisfaction and performance. Unlike a transactional relationship where there is only a simple exchange between buyer and supplier, where the supplier provides goods or services and the buyer provides money in payment, the collaborative approach that firms are adopting allows the buyer organization to seek to develop a long-term relationship with the supplier.

The strategic view is that the buyer organization and the supplier share common interests, and both benefit from seeking ways of adding value in the supply chain. There is a win-win situation, where buyer, supplier and end-customer can all benefit (CIP, 2010). However, in order for the buyer to keep track of these relationships and assess the supplier performance, an evaluation process must be in place (Stueland, 2004). It is quite understandable why companies today turn to buyers to reduce costs because good buyers will reduce the overall costs suffered by their organization.

In turn, this