2013 Supply Chain Management3Atiqah Ismail
Financial performance indicators:i.
the ability of the firm to generate profit
Capital risk and structure
gearing, the extent to which the firm is financed by debt over equity
measures the firms efficiency in the use of cash and its liquidity
According to Canon, evaluation of supplier’s financial performance is crucial to ensure the
supplier has a strong financial standing and can ensure business stability and continuity withCanon. This is particularly important as supply-chain members within the DCM industry,especially suppliers producing key components, are often closely integrated. In the event of
these suppliers going bankrupt can adversely impact the company’s
Manufacturing capability is the suppliers’ ability to produce a variety of products in flexible
volumes, while conforming to product and quality specifications, within the time framespecified by the customer (Tseng, 2009).Manufacturing capability indicators:i.
Product yield rate
the percentage of manufactured parts that meet the required designspecifications.ii.
the ability to deal with different production processes andvolumesiii.
Product quality levelv.
measures the efficiency in the utilisation and allocation of capitaland resources
Innovation capability of suppliers and partners is very important in the DCM industry ascompetition is based on innovativeness. Companies are increasingly and occasionally goinginto strategic alliances and joint collaborations to achieve mutual benefits from leveraging
each other’s innovation capabilities.
Manufacturers would seek suppliers with the innovationcapabilities that it needs to add-value to its products. For example, Sony supplies sensors for
, for reasons that Sony is more competent in sensor development and design.Performance indicators:i.
Numbers of patents owned
reflects creative and development capability,ii.
Ability to obtain critical technology and patents
reflects ability of a company toimplement advanced technologies within its processes and products,