The identification of the most appropriate key performance

Abstract

Material suppliers can play a very large role in the success of manufacturing firms. While Porter (1979) described suppliers as a competitive force, Childe (1998) recognised them as business partners in the extended enterprise. Given their importance it is reasonable to expect the appropriate resources and methodologies are employed in selecting the best suppliers. In addition to purchasing professionals, vendor selection processes should involve multifunctional teams to identify the most appropriate selection criteria or key performance criteria that proposed new suppliers may be measured against. This thesis contends that for many firms the ¿reality does not match the rhetoric¿. While firms may have vendor selection procedures in place they are often generic and ineffective. The procedures do not offer metrics important to the firm, does not engage stakeholders within the firm such as quality, logistics and engineering and are not value adding. An analysis of the procedures used by 7 manufacturing firms supports this. Through an empirical cross-sectional survey of 78 professionals working in various functional groups in manufacturing industries this research has determined the attitude and degree of involvement of these individuals in new vendor selection. In 1966 Gary Dickson proposed 23 vendor selection criteria surveying 273 purchasing managers and agents to rank them in order of importance. This thesis has proposed 12 new Key Performance Indicators for use in vendor selection. These have been evaluated and ranked by the survey group described above indicating that cost, quality and delivery remain of the greatest concern when selecting new suppliers.