Page 101 - DMGT408DMGT203_Marketing Management

Marketing Management/Essentials of Marketing

Notes

Caselet How Philips Selects Suppliers

hillips’ strategy focuses on leveraging their brand and core competencies in health
care, lifestyle and technology to grow in selected categories and geographies. They
Paim to deliver products of the highest quality at attractive prices.
Philips will select suppliers based on competencies and competitiveness in all relevant
areas. They also have legal and ethical requirements, alongside their expectations for
quality and cost-effectiveness. When one becomes a Philips supplier, it is required to sign
a General Purchase Agreement (GPA) and comply with General Business Principles and
Philips’ Supplier Declaration on Sustainability and our banned substances list. (Philips
has the policy to select companies with ISO 9000-2000 and/or ISO 14001 certification as
their suppliers.). All the suppliers are audited on a regular basis by Philips or third-party
auditors. Their programme of global certification audits verifies that suppliers are meeting
their obligations under their purchasing agreements with Philips. The audits are conducted
by trained specialists and Philips constantly monitors performance and results via a Philips-
wide Supplier Certification process. This enables them to provide immediate feedback to
internal and external stakeholders. Relationships between Philips and suppliers are also
governed by the Supply Management Code of Ethics.
Source: www.philips.com/about/businessesandsuppliers/suppliers/section-14749/index.html

4.5.6 Performance Evaluation

The last stage in purchase decision process involves an evaluation of the product as well as
vendor performance. In case of organisational purchases such evaluations are more formal than
are household purchase evaluations. This stage is important in that it provides feedback so that
the buying organisation and the vendor will be better able to work as a team. Management
personnel from different departments may periodically rate the vendor’s performance on criteria
such as product quality, delivery and post-supply service. According to K Smith, a major
component of post-purchase evaluation is the service the seller provides during and after sale.
Just like household buyers, dissatisfied organisational buyers may change vendors and/or
engage in negative word-of-mouth communications. S. W. Hansen, J. E. Swan and I. L. Powers
note that suppliers seek to minimise dissatisfaction and to encourage those who become
dissatisfied to complain to them and to no one else.

Task Interview a salesperson from a supplier organisation. Find out what steps
her/his company takes to sell supplies to buyer organisations. Does the
company believe in developing long-term relationship? If yes, what steps
it takes?

Self Assessment

State whether the following statements are true or false:
11. For making operating materials purchases, the buying centres are formed on an ad hoc
basis.
12. The list of specifications of the products to be bought is to be prepared by the buying centres.
13. The responsibility of a buying centre can be performed by a single individual also.

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