Analyzing Supplier Selection and Influence on Organization Performance

This report examines the significant influence of supplier selection on organizational performance. It discusses the concept of supplier selection, the factors considered during the selection process, and the principles and criteria involved. The report also delves into the concept of organizational performance and how it is evaluated in relation to supplier performance. Furthermore, it highlights the various ways in which supplier selection impacts an organization's performance, including timely delivery, smooth production, customer satisfaction, cost savings, increased efficiency, and continual improvement. The report emphasizes the importance of strategic supplier selection in achieving organizational goals and maintaining a competitive edge. Desklib provides access to similar reports and study resources for students.

Selection of suppliers and its influence to organization performance 1
SELECTION OF SUPPLIERS AND ITS INFLUENCE TO ORGANIZATION
PERFORMANCE
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Selection of suppliers and its influence to organization performance 2
TABLES OF CONTENTS
Abstract............................................................................................................................................3
Introduction......................................................................................................................................3
Concept of selection of suppliers.....................................................................................................5
Factors considered during selection of suppliers.............................................................................8
Concept of organizational performance...........................................................................................9
Evaluation of Suppliers along with organization performance.....................................................11
Principles of process of selecting suppliers...................................................................................15
Criteria for selection of suppliers..................................................................................................17
Influence of selection of suppliers on performance of an organization.........................................18
Timely delivery of essential and quality materials....................................................................20
Smooth sailing production.........................................................................................................20
Improves satisfaction of esteemed and targeted customers.......................................................21
Offer excellent support...............................................................................................................22
Save money for an organization.................................................................................................22
Increase efficiency and minimize price vitality.........................................................................23
Leads to continual improvement of operations of organization................................................25
Conclusion.....................................................................................................................................25
List of References..........................................................................................................................27

Selection of suppliers and its influence to organization performance 3
ABSTRACT
Selection of suppliers has enormous influence on operation of most organizations around
global marketplace. The selection of different suppliers needs to be offered priority in any
organization so as to help in maintaining quality performance in their operations. This research
paperwork examines how organizations are presently crucial due to the ideal selection of
suppliers. The process of selecting different suppliers has significant tasks. This article illustrates
how the right selection of suppliers offers appropriate quality of operational materials on
appropriate time, in the proper place, as well as at the right level of service. Any operation of an
organization is as appropriate as the suppliers that organization depends on during operations.
This article highlights some of the influence that selection of suppliers has on performance of
organizations. It is clear that organizations are progressively assigning more funds to their basis
competencies together with supporting outsourcing of non-basis operations that aim at increasing
their reliance along with dependence of suppliers. This study thus describes the empirical
investigation of the importance of selection of supplier and impact on performance of
organization. Besides, this paperwork focuses on an in-depth analysis of the selection of
suppliers and its influence on performance of organization.
INTRODUCTION
Selection of suppliers in the marketing society remains to be one of the traditional areas
of research in management of supply within operation of an organization. Therefore, supplier
selection refers to the process by which organization identify, evaluate, along with contract with
different suppliers (Pitchipoo et al., 2015, p. 2062). The process of selecting suppliers tends to
deploy tremendous amount of the financial resources of an organization. In return, different

Selection of suppliers and its influence to organization performance 4
organizations in competitive business environment always expect significant benefits from
contracting with suppliers that offer high value. In the past, performance of organization has
been divided into operative functions that include marketing, production, planning, and finance,
along with finance among other factors. Selection of suppliers remains to be the strategy that
helps in integrating these functions in coming up with a general plan for the performance of
organization that satisfies the service policy, maintaining the lowest possible charge level due to
the incredible competition setting that they are exposed to during operations. Besides, in the
present society that comprises of ever-increasing economic activities, organizations are
continually searching for advanced techniques to improve their competitive advantages through
choice of dealers (Chan and Chan 2010, p. 1198). Selection of suppliers stands out as essential
factor in boosting performance of organization due to the given number of tasks that any
business has to undertake. Organization relies on selection of suppliers so as they can survive as
it can be tempting to take shortcuts along with cut down on the number of concerns that have to
be dealt with in operations (Chang 2011, p. 541). Therefore, principal target of this research
paperwork is to explore influences of selection of suppliers on performance of organizations
around the global business environment.
Choosing the appropriate suppliers for an organization to improve on the performance
involves much more than idea that deal with scanning a series of price lists. The choice of
suppliers always depends on the wide range of factors that include value of money, reliability,
quality, as well as service. The way an individual weigh up the usefulness of these various
factors will base on their priorities together with strategy of business (Alinezad et al., 2013, p.
361). Therefore, strategic approach to selection of suppliers can also aid in understanding how
potential clients weigh up their decision of purchasing that in turn can either improve or reduce

Selection of suppliers and its influence to organization performance 5
performance of an organization. Assortment of suppliers continues to be considered as major
important tasks of professionals that deal with supply (Yin et al., 2015, p. 1179). Besides,
selection of suppliers has enormous influence on performance of an organization since it involve
the process of decision making that comprise of trade-offs among multiple criteria that may also
be conflicting to choose the most suitable supplier for the continuation of performance of
organization. Besides, selection of suppliers is process that is complicated where different supply
professionals have to solve different problems relating to performance of organization (Zhang et
al., 2016, p. 7). One of the problems remains to be how to select appropriate set of criteria that
are suitable with priorities and strategies of business for efficient evaluation of potential
suppliers. Selection of suppliers always aims at striving to strengthen planning of organization
and contract monitoring along with system of control so as to ensure successful performance of a
firm.
CONCEPT OF SELECTION OF SUPPLIERS
Suppliers in the business society refer to the firms along with individuals responsible for
the provision of different services as well as goods. These individuals and organizations provide
these essential operations factors at specified prices. Their identification together with
engagement in performance of work always depends on process of evaluation of supplier.
According to Winter and Lasch (2016, p. 651), selection of suppliers remains to be process that
deals with assessing performance of different suppliers with the aim of putting them in the lists
of supplier base or award them with specified contracts. The numbers of techniques along with
models are applicable to make assessments of suppliers. In most cases, suppliers are always
evaluated on the foundation of the criteria where the highest is always receiving the contract. As

Selection of suppliers and its influence to organization performance 6
stated by Sarkis and Dhavale (2015, p. 182), supplier in operations of different organizations
forms the essential component in production process. Therefore, supplier remains to be critical
for most organization in business environment to identify as well as select ideal supplier that can
always perform well in an efficient manner. Additionally, appropriate criteria of most suppliers
relevant to improving performance of organization during the process of selection are delivery of
product, capacity, price, together with assessments of information.
Selection of suppliers in most organizations is performed on a yearly basis or in real time.
Such selection process of suppliers is done by the committee that represents the needs of
organization to improve on their performances (Yucenur et al., 2011, p. 827). Every supplier
selected during the process is given equal opportunity to present their own performance tactics in
the process of evaluating supplier. In most scenarios, marking criterion is placed in place as
every supplier that submit any request for work performance are always subjected to the process
of interview. However, some models applicable in evaluation of suppliers remain to be tough to
ignore internal or external forces. As illustrated by Soh et al., (2016, p. 192), evaluation of
suppliers that aim at improving the operations of organization is always affected indirectly or
directly with organizational environmental factors within as well as external services. Such
impacts are established to comprise of positively or negatively affected the process of supplier
evaluation. Besides, many surveys have pointed out that adequate evaluation of supplier remains
to be a tough endeavor since it requires structured policies together with goals to be implemented
during operation of organization. Correct selection of suppliers help in improving the
performance of organization. It improves the performance visibility of the firm while it uncovers
as well as removes hidden waste and cost drivers within the supply chain (Villanueva et al.,
2015, p. 1283). Selection of right supplier help organizations to have sufficient knowledge

Selection of suppliers and its influence to organization performance 7
concerning how their suppliers are performing enabling them to have effective way of ensuring
that every desire of targeted clients is met adequately. Therefore, developing the robust, easy to
deploy technique of selection of suppliers by an organization remains to be the critical business
competency towards improvement of performance (Kessler et al., 2012, p. 142). The method
deployed in selection of such activities should be sound and practical towards business
improvement.
The need to evaluate suppliers during their selection processes remain to be critical factor
towards improving performance of organization. Supplier evaluation in most cases will form the
management activity with the principal focus of attaining essential data useful in analyzing and
management of supplier relations along with states of supply (Karimi and Rezaeinia 2014, p.
1231). The procedure always involves concurrent reliance on figure of significant elements in
performances of suppliers that comprise of quality, price, along with delivery lead times.
Moreover, importance of supplier selection process within an organization is perceived from its
influence within general performance of firm along with more specifically on features of
completed products that include cost, development of new product, design, and quality among
several effects. Present increased in regulations by government, the rapidly advancing awareness
of environment among targeted customers along with increased competition drive organizations
to undertake different initiatives that aim at transforming their process of supply chain and work
of their suppliers (Fallahpour et al., 2017, p. 501). Conversely, traditional approach used for
selection of suppliers utilized to take into account several dealers as well as single primary
criterion for assortment and price. Furthermore, current marketplace has shifted towards
astringent a single dealer selected through method of numerous principles as a way of improving
organizational performance (Chen et al., 2016, p. 1469). Such tendency makes useful of

Selection of suppliers and its influence to organization performance 8
objective assessment of performance of dealer higher since lasting supplier policy is not just
essential for growth together with prosperity of organization, although it is essential section of
total plan of operation of business.
FACTORS CONSIDERED DURING SELECTION OF SUPPLIERS
There are always several factors considered during the process of evaluating suppliers
that affect performance of organization. Some of these factors for evaluation include;
 Timely delivery
 Completeness of shipped orders
 Items’ quality
 Competitiveness of price
 Strength of financial situation
 Capacity to service orders term to be special
 Quality of services of targeted customers
 Expertise of technical staff along with sales representatives
Consistency on these factors has to be taken in consideration to guarantee that selection of
dealer can help towards improving performance of organizations (Arabzad et al., 2015, p. 811).
Some of the factors to consider in ensuring that selection of suppliers influence performance of
organization positively comprise of management of supplier. The management of supplier must
relate to supplier sourcing, supplier qualification, continuous supplier improvement, supplier
evaluation, along with phasing out of suppliers. Therefore, after an organization have identified
what it need to buy, it need to find out who wants to sell the required goods and services to them
at any particular moment (Chan 2011, p. 529). The organization can then easily locate suppliers

Selection of suppliers and its influence to organization performance 9
by going through the listings in different yellow pages, industrial directories, along with various
online sources readily available.
FIGURE 1: SHOWING SOME OF ESSENTIAL FACTORS TO CONSIDER DURING
SELECTION OF SUPPLIERS IN OPERATIONS OF AN ORGANIZATION
CONCEPT OF ORGANIZATIONAL PERFORMANCE
Organizational performance in business community refers to the improvement of the
productivity, growth, profitability, as well as market shares of a firm in particular duration.
Financial analysts on the other side indicate that organization performance is always analyzed by
use of performances emanating from the value of shareholder, marketplace, capacity of

Selection of suppliers and its influence to organization performance 10
production, along with performance of organization (Dalvin and Kant 2015, p. 662).
Organization performance is the measure that deals with the increase in marketplace share
through the growth of performance. Financial performance is attained through profits as well as
improving capital based on the operations while capacity of production represents performance
of work regarding how much produce is channeled out. In most cases, organizations are always
capable of establishing their performance by making assessments of the factors that affect
organizational performance (Hada et al., 2014, p. 42). Additionally, most organizations can
improve their performance when they ensure that appropriate selection suppliers effectively
perform their operational procedures for their operations. Therefore, in relation to the
investigation, organization performance is presumed to increase if proper methods along with
techniques are employed in evaluation of suppliers.
Performance by every organization remains to bestage to which chain of supply tends to
fulfill aims of price, quality, speed, dependability, along with elasticity. Advantage of choice of
suppliers can then be illustrated from its effects on accomplishment of organization and extra
specifically, on final appearances of products that include design, cost, quality, manufacturability
among other elements (Jordaan 2011, p. 291). Strategic evaluation of performance of suppliers
during selection process aids organizations in increasing their activities in range of manners that
consist of assisting within dealer process enhancement that helps in enhancing general
performance of organization. The enhancement of such performance then permits for best
allocation of different assets for plans dealing with development of suppliers (Fazlollahtabar et
al., 2011, p. 1049). It also helps different organizational directors in rearranging their network of
supplier on basis of presentation. Measures of accomplishment of suppliers also assist in
improving usefulness along with efficiency of chain of supply during process of selecting

Selection of suppliers and its influence to organization performance 11
suppliers to support operations of different organizations. For instance, financial as well as non-
financial performance measures that comprise of time, quality, physical setting, innovation, and
safety performance of price, revenue, cost-effectiveness, and efficiency of administration (Chen
et al., 2016, p. 1483). Performance measures also include satisfaction of internal customers,
strategic performance, and supplier performance. Therefore, through selection of suppliers,
organizational performance can be indicated by the control efficiency of cost applicable to
rectify inefficiencies of cost or in short, minimize charges while maximizing profits.
EVALUATION OF SUPPLIERS ALONG WITH ORGANIZATION PERFORMANCE
Selection of suppliers remains to be viewed mainly as the most essential function of the
procurement function. It is seen as vital role since the suppliers of organization can quickly
influence quality, reliability of delivery, cost, along with accessibility of its essential yields. In
most cases, management of organizations always feel that appropriate selection of suppliers can
help in reducing cost of product as well as material while guarantyingsoaring degree of value
along with after transaction operations (Chinomona and Hove 2015, p. 71). The significant
suggestion here remains to be that qualified evaluation should remain within place for thriving
management of chain of supply. Therefore, it is clear that there consist of range of advantages of
dealer appraisal that come with appropriate selection of suppliers. These comprise of capacity to
enhance the skills and strengths of suppliers to the advantage of buyers leading to improve
organizational performance (Deng et al., 2014, p. 162). It also enhances quality and process
performance and continuous reductions of cost in operations.
Selection of suppliers in operations of firms is one of the very many simple concepts that
make a lot of sense to any well-meaning organization around the global society. Unfortunately,

Selection of suppliers and its influence to organization performance 12
selecting appropriate supplier is not that easy, as over past decades, organizations have remained
to crumble as a result of failure to understand appropriate exercises within management of
excellence suppliers (Belingher et al., 2010, p. 7). Therefore, operations that include
determination of accomplishment of suppliers before selection, connecting dealers in systems
that deal with management of quality, supplier reviews, progress of supplier, with integration
along with spirited selection of supplier continue to be significant chance to expand performance
of organization in relation to client service release stages together with reduction of costs of
operation. According to Igarashi et al., (2015, p. 448), in a case study review on supplier
selection for sustainable operations found that organization productivity in terms of brands and
reputations increases if supplier evaluation is done well. The study conducted by the authors
noted further that customers become loyal to certain brands increasing revenue for the respective
organizations. Hogan and Coote (2014, p. 1012) in their study stated that supplier evaluations
creates value by involving and collaborating with suppliers evaluation process. The evaluation
process creates a marking scheme in which suppliers can correct their performance. Based on
culture one of the carter’s criteria for supplier evaluation, suppliers would be chosen on the basis
they promote or possess culture similar to that of the organization (Lu et al., 2014, p. 737). The
mentioned studies provide empirical facts on how supplier selection can lead to building
reputations and image, but they lack empirical facts to link with organization performance
metrics directly.
Supplier evaluation process enables organization to identify and work with suitable
vendors thus it reduces risks and disruptions in the production process. Several risks are
associated with supplier selection and performance. Examples of such risks are supplier refusal
to supply, supplying non-quality items, inconsistency in supplies, and changes in pricing. Rajesh