Supplier solicitation & selection criteria: riordan mfg. Essay
Supplier solicitation & selection criteria: Riordan mfg.
The process for soliciting suppliers within Riordan is implied to be based on the type of product or service being purchased, uniqueness of the product or service, and total cost. Solicitation planning, according to Westcott (2006), deals with the exact definition of the goods and services required, estimates of the cost and time required, and preparation of a lost of potential sources. During solicitation planning within Riordan, a decision model is developed, with the list of required attributes with a relative weight for each attribute and a scale for measuring the attributes of the alternatives. Identifying potential suppliers and distribute solicitation material and requirements to them is the next step.
The procuring entity, in this case Riordan manufacturing, shall disqualify a supplier or contractor if it finds at any time that the information submitted concerning the qualifications was false. As world markets become increasingly competitive, Riordan has discovered that close partnership relationships with important suppliers can produce managerial, technological, and financial benefits. The Japanese practice of single sourcing—with the close relationship it forges between buyer and seller—has been used as a model by the organization in seeking to reduce and better manage their
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In order to internationalize, Riordan needed to develop a local client base and a local supplier base and must win the loyalty of both. It will take time to develop a reputation in the Chinese foreign market and to develop organizational structures, routines, and processes to meet the needs of this market. The main supplier selection criterion in the Riordan Manufacturing organization is proximity to the supplier based on the site operations of the company, which could result to significant cost savings to the firm. In their effort to increase sales and expand customer base, the company has decided to relocate to the city of Shanghai as against the earlier decision to locate their China operations in Hangzhou, which was given impetus by a positive economic outlook that leverages relatively low interest rates into new investments to enter new markets and increase productivity. Supplier selection decisions, as argued by den Hertog, Fleuren, Kort and Besliskunde (2005) are complicated by the fact that multiple criteria must be considered in the decision making process. Accordingly, the supplier selection process within Riordan seems to be tempered by conditions pushing the individual units toward local suppliers and decentralized decision making.
Other criteria for supplier selection implied are: (1) previous experience and past performance with the product/service to be purchased; (2) relative level of sophistication of the quality system, including meeting regulatory requirements or Riordan-mandated quality system registration; (3) capability to meet current and potential future capacity requirements and at the desired delivery frequency; (4) financial stability of the supplier; (5) technical support available and willingness to participate as partner in developing and optimizing design and a long-term relationship; (6) total cost of dealing with the supplier (material cost, communications methods, inventory requirements, incoming verification required); and lastly, (7) the supplier’s past track record for business performance improvement.
The supplier selection criteria are defined by a cross-functional team. Team members typically are from purchasing, quality, engineering, production and materials management. Membership consists of personnel with technical/applications knowledge of the product or service to be purchased, as well as members of the department that will use the purchased item or service. By operating abroad, supplying goods and services, and fulfilling their promises, Riordan develops market-specific non-tangible resources. As these resources accumulate, their wider use to create value for the firm is motivated. There is “always” an excess supply, either perceived or real, and consequently an increase and greater dynamic in the resource commitment of the firm in that specific market.
den Hertog, D., Fleuren, H., Kort, P. & Besliskunde, N. (2005). Operations Research Proceedings 2004. New York: Springer.
Westcott, R. (2006). The Certified Manager of Quality/Organizational Excellence Handbook. Milwaukee, Wisconsin: ASQ Quality Press.