SUCCESS FACTORS FOR SUPPLIER SELECTION

Quality,price and delivery are the most critical factors in the supplier selection process.

Quality is generally defined as conformance to requirements or fitness to use. But, like a multi-faceted di-amond, quality may be perceived through five principal aspects: 1) transcendent quality is an idea, a condition of excellence; 2) product based quality is tied to product attributes; 3) user based quality reflects fitness to use; 4) manufacturing based quality is conformance to requirements; and 5) value based quality is the degree of excellence at an acceptable price. Whatever the perspective, quality has two major components: quality of conformance–quality is defined by the absence of defects; and quality of design–quality is measured by the degree of customer satisfaction with a product‟s characteristics and features. (APICS, 1999) In supplying products or services there are three fundamental parameters that determine their saleability. They are price, delivery, and quality. Customers require products and services of a given quality to be delivered by, or be available by, a given time, and to be at a price that reflects value for money. These are the needs of customers. An organization will survive only if it creates and retains satisfied customers and this can only be achieved if the products or services meet customer needs and expectations. While price is a function of cost, profit margin, and market forces, and delivery is a function of the organization‟s efficiency and effectiveness, quality is determined by the extent to which a product or service successfully serves the purpose of the user during usage (not just at the point of sale). Price and delivery are transient features whereas the impact of quality is sustained long after the attraction or the pain of price and delivery has subsided. Therefore, the fact that quality is on top of the list of critical success factors for supplier selection should not be surprising. 4.2. Delivery Along with quality, another factor that is considered a basic prerequisite for supplier selection is delivery. Even after 36 years since Dickson‟s study conforming to quality specifications and meeting delivery deadlines remain the most important supplier selection criteria. In a fundamental sense, these form the threshold criteria that buying firms apply to all suppliers before they can be considered as strategic partners in the buyer-supplier relationship (Choi, 1996). They have emerged as order qualifiers to the extent that if suppliers cannot demonstrate acceptable performance in these two areas, they will be dropped as potential candidates during the screening phase itself. One possible explanation for the continuing high ranks that these two criteria receive is that conformance to specifica-tions in these two areas will ensure minimization of disruptions in the buyer‟s manufacturing operations thereby ensuring uninterrupted production.