Page 110 - DMGT525_MATERIALS_MANAGEMENT

Unit 7: Selection of Suppliers

In fact, Hirshland created T3 to function like a real estate department for technology start- Notes
ups. It handles interior and exterior architectural issues, finds and manages contractors,
advises on lease negotiations, and even manages the leases for clients—it purchased a
document-management system specifically for that purpose. “If we can’t make the smallest
three-person company happy about T3, we’ve failed,” Hirshland says. The logic, he adds,
is simple: Successful small companies don’t stay small for long.
In Sepaton’s case, T3’s brokers found six spaces that met Iacono’s criteria. He picked the top
two and told Hirshland to get a deal done. Days later, Sepaton signed a three-year lease on
a new 21,000-square-foot home. Hirshland also managed to get some new office furniture
thrown in free of charge. Following the frustration of dealing with the large corporate
brokers, Iacono found the experience satisfying—as well as comfortably familiar. “It was
the kind of service we hope we give our customers,” he says.
Questions
1. What was the most satisfying thing that Iacono found about T3?

2. Critically analyze the case and do a SWOT analysis of the case.

Source: http://www.inc.com/magazine/20050801/vendors.html
7.5 Summary

 Supplier selection has become one of the most important tasks of purchase in modern
times.
 The process of selection of supplier can be grouped in four stages including: the survey
stage, the enquiry stage, negotiation and selection stage and experience stage.
 A preliminary enquiry called a Request for Information (RFI) is sent to all short listed
suppliers from the previous stage, to seek information. The RFI can be used as a screening
device to further prune the list of potential suppliers.

 Suppliers who meet the buyer’s need get registered and become eligible to receive future
orders.
 The vendor rating may take the form of a hierarchical ranking from poor to excellent and
whatever rankings the firm chooses to insert in between the two.
 Most firms want vendors that will produce all of the products and services defect-free and
deliver them just in time.

 Once established, the rating system must be introduced to the supplying firm through
some sort of formal education process.
 The first move in executing any of the techniques being used in vendor rating some
attributes need to be well thought-out. A firm should focus on the attributes that it finds
most important.

 The three most common approaches are the categorical system, weighted-point average
system and the cost-based system.

 International standards are premised on the thinking that single source buying provides
some advantages which multiple source buying does not.
 Vendor development can be seen as an attempt to get the advantages of both spreading
risk, building competition and at the same time establishing a good rapport.

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