Supplier evaluation criteria : A comparative case stydy between the fashion retail industry and the subsea industry
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The purpose of this study is to find out how firms set evaluation criteria for their suppliers, and how they use the evaluation system in practice, if they have one. This topic has not been well documented, and to perform the study, we needed to get a deeper understanding of subjects like Supply Chain Management, Buyer-Supplier relationships, Supplier evaluation criteria and Supplier evaluation systems. Based on a literature review on these topics, we were able to form the research questions and the research design. The research questions are: On what basis do buying firms set evaluation criteria for their suppliers, and how do they use the evaluation system in practice? Do the supplier criteria and evaluation systems vary between the high-tech and low-tech industry? We have studied two cases that represent a high tech and a low tech industry; the subsea industry and the fashion retail industry. We performed a comparative case study between them to look for similarities and differences in their supplier evaluation criteria and evaluation systems. The research question is answered by analysing data retrieved from our data collection through interviews, archive data and some observation. Interviews were conducted with purchasing and sourcing managers in four different companies, two in each industry. The companies were selected based on their affiliation with the chosen industries and their availability to us as researchers. Companies that could represent a large share of the Norwegian market were favoured. When necessary, we performed more interviews with different people in the companies to strengthen the data collection and improve our understanding of the company. The analysis was done using large extracts of the data presented as citations. Then the two industries were summed up and compared, and finally related back to the theory. Findings suggest that both industries draw from their own experience when they develop the evaluation criteria for the suppliers. There is however a difference in how this has been systemised in an evaluation system in each company, where some have a formal evaluation system while others use their intuition and memory. The systems were not consistent within the industries. This study shows that there may be a weak link between supplier selection practices and supplier evaluation criteria, and that the models provided by theory may not be prominent in real world applications. The practical implications have relevance for both the buying company as well as their suppliers. Buying companies need to develop criteria relevant for own organisation and use them to evaluate and then develop their suppliers. The suppliers must understand how they must act and think so that they can develop their skills and capabilities in the desired way.