Suppliers directly impact the quality of raw materials and other materials that manufacturers and businesses use. Therefore, choosing the right and reliable suppliers guarantees a business is consistent and has the right standards for the final product. Also, suitable suppliers ensure smooth business operations. Choosing reliable suppliers guarantees timely delivery, maintains inventory levels, and resonates with company needs and goals. The other reason why choosing suppliers has been a topic of interest in the supply chain is ensuring compliance with ethical standards. Ethics have been a major consideration for many consumers and agencies today (Anderson, 2019). Therefore, before contracting with any supplier, it is important to consider their compliance with moral aspects. That guarantees a company does not harm its reputation and is involved in ethical scandals.
The need for choosing the right supplier, a topic of consideration in the business world, has led to risk management in supplier selection being a hot topic in the supply chain. Risk mitigation is an essential step in the supplier selection process that ensures a business evaluates the potential risks that can arise with each supplier of consideration. Risks vary and may be related to finance, reputation, ethics, law, or quality of supplies. Therefore, risk management is a hot topic since businesses entirely rely on suppliers. Any disruptions or delays in the supply chain can cause tremendous harm to the production process. Efficient risk management helps mitigate these risks detrimental to the appropriate supply chain flow.
Monczka et al. (2021) explain that one of the aspects to consider during risk management is evaluating a supplier’s delivery performance. How the supplier ensures cost-effectiveness and product quality is a question for operational continuity. In every business, operational continuity is necessary for a stable and smooth flow of goods and services. Customer satisfaction is always a major aspect of the business world. Therefore, acknowledging and eliminating potential risks during supplier selections is always a major focus for any business that desires to retain its customers and ensure undisrupted production.
The growing social responsibility has demanded companies to evaluate their supply chains. A company’s commitment to conserve the environment and respect human rights has been a consideration for many customers. That has necessitated firms to emphasize risk management during supplier selection to prevent scandals. Monczka et al. (2021) pinpoint the need to check supplier quality, which determines a supplier’s dedication to sustainability, helping align a business with contemporary expectations.
Lastly, with the increasing globalization and technology, suppliers may claim to supply in all corners of the world. Their words may be enticing and easy to convince for businesses in need of good suppliers. However, with good risk management, a company can evaluate challenges like disasters, political issues, or economic issues in the areas where suppliers originate. That can help avoid suppliers compromising the supply chain, especially if identified challenges are highly likely to occur.
Overall, choosing suppliers has remained a crucial topic in the business world due to various aspects. These aspects include a continuous production process, ethics, and the long-term viability of businesses. The process has a major role in shaping competition, resilience, and sustainability of companies in the market. Thus, a firm that desires to retain these aspects must emphasize risk management during supplier selection. Risk management provides insights into the performance levels of suppliers of interest, their competencies in the supply chain, and their commitment to delivery schedules.
References
Anderson, A. (2019). Do Ethics Really Matter To Today’s Consumers? forbes.comhttps://www.forbes.com/sites/theyec/2019/08/20/do-ethics-really-matter-to-todays-consumers/?sh=3159fc1d2d0e
Monczka, R. M., Handfield, R. B., Giunipero, L. C., & Patterson, J. L. (2021). In Purchasing & Supply Chain Management. Cengage.
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