Supplier Selection and Assessment: Their Impact on Business Performance

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\u27s 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\u27s business performance. Results indicate that soft, non-quantifiable selection criteria, such as a supplier\u27s 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\u27s willingness and ability to share information also has a significant impact on the buying firm\u27s performance, yet is again considered to be relatively unimportant