Heartland & Company
What are the advantages of basing a supplier’s overall evaluation on its lowest performance on one of the five dimensions (Quality, Delivery, Cost Management, Technical Support, and Wavelength)? What are the disadvantages? Overall, do you think that basing a supplier’s overall evaluation on its lowest performance on one dimension is a good idea or not? Why or why not?
There are a couple advantages of basing a supplier’s overall evaluation on its lowest performance measure. One such advantage is that it is a clear and simple way of eliminating suppliers that measure poorly against suppliers that measure highly to a company. It also is a simple way to determine the major flaws of a particular supplier and how that supplier relationship is affecting the business negatively. For example, if it is absolutely essential to your business to have strong technical support from your suppliers than the company can easily eliminate suppliers that do not fulfill these needs. This method also has its fair share of disadvantages. The most evident disadvantage is that the dimensions all play an important part in the supplier relationship so to focus on one and ignore the rest would be a recipe for disaster. For example, if a company rates very poorly on delivery but they are rated highly in other important areas such as quality and cost management, the company may be willing to wait out longer delivery times because they value these other dimensions more highly. I believe that evaluating a supplier on its lowest performance in one dimension is a poor management decision. To only take into consideration one dimension when many dimensions play into the supplier/manufacturer relationship is to make a poorly thought out and careless decision. For this reason I believe that companies should utilize the Factor Rating Method and use weighted averages for each dimension in order to get a better understanding of a supplier’s overall value to a manufacturer. 2.
Develop importance weights for the five supplier rating dimensions shown in Table 1. Should these weights be equal? Please briefly explain the basis for these weights. The sum of these five weighted dimensions must add to 100 points. When determining the weights of the five dimensions, I decided to vary the weights based on the two current goals of the company, which are developing long-term relationships with suppliers and generating cost reduction. The dimension I ranked the highest was quality because regardless of the two goals it is a factor that is extremely important in picking a supplier and in the long run plays into both goals. While this dimension is given the most weight, it will have little effect on the overall ratings of the suppliers because they both rank equally in this area. I gave cost management the second highest weight because it is one of the major goals of Heartland & Company and cost management plays a huge role in the success of a manufacturing business. Wavelength was weighted the third highest because it is directly related to developing and maintaining long-term relationships with suppliers which is an important goal of the company. Lastly, I ranked technical support and delivery at the bottom. While these two dimensions were ranked last, I made sure to keep all of the weights close to each other because they all play a role in reaching the companies two goals. Some just do not contribute to them until later on in the manufacturing process. Along with the weights I distributed to the dimensions I also developed a system of scoring the suppliers in order to determine their individual weight per dimension. In the case the suppliers have three rankings in each of the dimensions: Partner, Key, and Approved. I allotted 90 points to Partner, 80 points to Key, and 70 points to Approved. Dimension
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