Any organizational purchases are view to be plain, routine and require only
the monitoring of continued satisfaction with the product attributes (e.g. quality,
delivery, price), yet, it requires a sound and pragmatic tool to evaluating and
selecting of suppliers (just-in-time purchasing), with one of the benefits being a
long-term, mutually beneficial relationship with fewer but superior suppliers. The
objective is to find the best supplier base, not the highest quality, lowest price or
the shortest delivery. In reducing the number of suppliers, companies usually
reduce their current supplier base by cutting out all but one or two of their existing
suppliers, and not looking outside their current universe of suppliers. For sure,
companies who do not look beyond their existing supplier base, will have much
less chance of ending up with the best supplier base.
“All the organizations and activities associated with the flow and
transformation of goods from the raw materials stage, through to the end user, as
well as the associated information flows, both upstream (supply network) and
downstream (distribution channel)” (Hanfield, 1998).
SCM has recently attracted significant interest from both researchers and
practitioners in several directions. At the strategic level, larger companies are
increasingly concentrating on “core” activities and “outsourcing” other functions
to the network of suppliers.
Carrying these issues in mind, the objective of the first part of this study is
threefold. First, the study provides a brief review of the relevant literature and
research in the area of supplier evaluation and selection. Second, it discusses the
difference in emphasis required in seeking a partnership type of buyer-supplier
relationship, rather than a traditional, arms-length relationship. Third, through the
use of a case study among Volvo Powertrain Corporation, the study explores the
new, additional set of issues that becomes relevant to supplier selection when the
firm seeks a ‘partnership’ type of relationship with a supplier.