Supplier Evaluation Report: Performance Criteria for Oil and Gas

This report examines the supplier evaluation methods employed by Pacific Oil and Gas, an independent energy resource development company. The study focuses on the categorical evaluation and rating method, detailing how the company assesses suppliers based on factors like delivery time and product quality. Four categories—Excellent, Good, Fair, and Poor—are defined, and the report emphasizes the value these categories bring to the organization. The advantages include prioritizing suppliers for urgent needs, facilitating long-term contracts, and avoiding business with underperforming suppliers. The report highlights the importance of supplier management in maintaining profitability and quality, referencing key sources such as Johnson & Flynn (2015) and Luzzini, Caniato and Spina (2014) to support its analysis. The report suggests that a well-defined supplier evaluation system is crucial for effective supply chain management and overall business success.

Supplier Evaluation
1

The primary objective of this report is to identify methods that are being used by a particular
business organization to measure performance of their suppliers. Supplier management plays
a very important role in maintaining effective and efficient profitability margin and quality of
goods for any business organization. Business organization under consideration in this report
would be Pacific oil and gas which is the independent energy resource development country
established in Singapore.
Potential performance criteria and categories
Categorical evaluation and rating method have been used by management of Pacific Oil and
Gas evaluating performance of their suppliers and providing categories to suppliers. The raw
material for a particular project is taken by this organization on the basis of rating provided to
the suppliers on the basis of categorical evaluation and rating method. Categorical evaluation
and rating method is a formal method of evaluating performance of supplier with the help of
tracking their past records in the organization. There are various factors that are considered
by the organization before providing a particular category to particular suppliers and the most
important factors are time of delivery and quality of product (Johnson & Flynn, 2015). The
record can be easily identified by management of Pacific oil and gas with the help of
vouchers prepared by purchase department of the company.
After considering all the factors of following are the four categories developed by the
management of the company and all suppliers are categorized into these four categories-
Excellent- This is the most efficient category of supplier performance. For a particular supply
to be categorized as excellent, supplier should deliver product and services within the decided
due date and quality of product should be high (Johnsen, Howard and Miemczyk, 2018). In
addition to that, majority of times the suppliers delivery date demanded by the organization.
Good- In this category suppliers are able to provide raw material within the due date decided
in accordance with the contract but they are not always able to provide demanded delivery
date.
Fair- Getting shipment from this category of suppliers to require constant to follow up and
sometimes delivery is received marginally late as compared to the decided date and time
(Luzzini, Caniato and Spina, 2014).
2

Poor- generally shipment received from this type of suppliers is significantly late even after
constant follow up.
Value addition to the organization
After evaluating the supplier management system of Pacific Oil and Gas, it can be said that
performance criteria and categorization of suppliers will be very valuable for the
organization.
 One of the primary advantages of this categorization will be at the time of urgent
requirement of raw material. At the time of emergency management of the
organization will only be contacting the suppliers that are categorized as excellent as
probability of timely delivery in such scenario is significantly higher as compared to
other categories (Monczka et.al, 2015).
 Another advantage would be that they will be able to enter into long term contracts
with the suppliers on the basis of their categories.
 They will also be able to avoid doing regular business with poor category of the
supplier which will save time and profitability margins of the company.
3

References
Johnsen, T.E., Howard, M. and Miemczyk, J., 2018. Purchasing and supply chain
management: A sustainability perspective. Routledge.
Johnson, P.F., & Flynn, A. E., 2015. Purchasing and supply management. 15th ed. McGraw-
Hill Higher Education. Supplier Evaluation and Supplier Relationships', pp. 365-370
Luzzini, D., Caniato, F. and Spina, G., 2014. Designing vendor evaluation systems: An
empirical analysis. Journal of Purchasing and Supply Management, 20(2), pp.113-129.
Monczka, R.M., Handfield, R.B., Giunipero, L.C. and Patterson, J.L., 2015. Purchasing and
supply chain management. Cengage Learning.
4