Supplier Selection and Assessment: Their Impact on Business Performance

Authors

  • Vijay R. Kannan,

    1. Vijay R. Kannan is associate professor of operations management in the Department of Business Administration at Utah State University in Logan, Utah.
    Search for more papers by this author
  • Keah Choon Tan

    1. Keah Choon Tan is assistant professor of operations management in the Department of Management at the University of Nevada-Las Vegas in Las Vegas, Nevada.
    Search for more papers by this author

  • This research was sponsored by the APICS E&R Foundation and The Supply Chain Council, Inc., Research Grant #99-15.

SUMMARY

Increasingly, firms are allocating more resources to their core competencies and encouraging the outsourcing of non-core activities, which increases their reliance and dependence on suppliers. This increases the importance of effective supplier selection and assessment. Sparse evidence exists regarding the impact of supplier selection and assessment on a buying firm's business performance. This research describes an empirical study of the importance of supplier selection and assessment criteria of American manufacturing companies for items to be used in products already in production. Moreover, it identifies relationships between criteria and a buying firm's business performance. Results indicate that soft, non-quantifiable selection criteria, such as a supplier's strategic commitment to a buyer, have a greater impact on performance than hard, more quantifiable criteria such as supplier capability, yet are considered to be less important. Assessment of a supplier's willingness and ability to share information also has a significant impact on the buying firm's performance, yet is again considered to be relatively unimportant.

Ancillary