A] Introduction
In today’s commercial world, where survival of the fittest is the norm, it is becoming very essential that organizations strive to deliver products and services that mean value to their customers. Technology, Price, Quality, Delivery and Service are the factors that determine the profitability and the sustenance of growth of an organization. In today’s intermeshed world, the age-old concept of doing all under one roof by an organization has disappeared. This model has been replaced with a combination of both in-sourcing and out-sourcing. While in-sourcing is limited to carrying out the key and core activity by themselves, all non-core activities are out-sourced by modern organizations which strive to maintain themselves lean in this competitive world. To meet the customer requirement, it becomes paramount that the entire supply chain has to collaboratively work so that the profitability of the chain is maximized and not that of an individual unit of the chain. This conveys a meaning that the suppliers of an organization become one key stake holder which would determine the growth of the organization, its profitability and its customers’ satisfaction. It is a satisfied supply base that enhances the operational indices of any organization. While most organizations have in place a system of evaluating the suppliers for enrolling and for their performance evaluation many do not have a mechanism of taking a periodic feedback from their suppliers to assess their satisfaction level. Elaborate questionnaire which run into pages that probe deeply into the innards of the working and on-site assessment by buying teams are the prevailing norms adopted by organizations before they register a firm into their supply base. Organizational Soundness, Technical Capability, Quality Systems, Management attitude are some of the parameters that are assessed for taking aboard a supplier. Once a supplier is registered and starts supplying, organizations have a system of periodic performance evaluation which comes into play. Such systems may be time-based where the evaluation may be done on a monthly or quarterly or on any other fixed time frame basis or on a continual basis where the performance is cataloged for each delivery against a purchase order. Generally such evaluation is limited to the dimensions such as price competitiveness, product quality, delivery performance with respect to requirement and the cooperativeness or response of the suppliers. It is very rare that organizations search for knowing how well they meet the needs and expectations of their suppliers. It is not uncommon for organizations to address their suppliers as partners, but it is only the excellent organizations that go that extra mile to assess the satisfaction level of their suppliers and institute corrective mechanism within their own system to augment the satisfaction level of their suppliers. These are the organizations that treat their suppliers as family. They are governed by the principle that “it is a satisfied family that is a happy family”. Many methods are introduced by such progressive organizations to keep their supplier fraternity happy. Training programs, feedback sessions, recognition through awards, early involvement in product development are some methods adopted by organizations as a part of their mission of retaining and nurturing an excellent supplier base. These organizations have learnt that it is their excellent supply base that gives them their competitive edge. B] Approach to measuring Supplier satisfaction In this paper we present a simple and simplified approach for assessing the supplier satisfaction. The methodology of getting the feedback is through an “instrument”. Only the building blocks of the instrument are outlined in this presentation. Organizations can easily tailor this, by adding relevant questions upon the blocks for obtaining the feedback from their suppliers. The “instrument” can be used to acquire the data for analysis according to the needs of the organization. At one extreme it may take the form a hard copy questionnaire mailed to a sample of the suppliers (periodicity being fixed by the organization – for example this may be done once a year or once in two years) and where the returns can be used for analysis and improvement or at the other end it can be continuously open (available online) where the suppliers can poll their feedback as and when they feel it convenient to do so. In such open-at-all-time approach when sufficient data gets collected, at the back-end organizations can use them for carrying out the analysis based on a set of inputs (based on the numbers that they want to carry out the analysis) or can individually assess each feedback against set standards for course-correction. Such internal corrections by the buying organization send out a message to the market that “here is a caring organization that values its suppliers”. This allows the organization to build a strong and agile supply chain which it can leverage to deliver value to its customers. According to the model presented here, supplier satisfaction may be measured along three dimensions. They are:
1] The Personnel factor: The Personnel factor dimension can be used to measure the strength of the relationship between the buying team and the supplier. The supply chain cannot exist in isolation of the human interface. There is a constant interaction between Buyers of the organization and the Sales / Marketing team of the suppliers. The strength of this bond has a reflection on the satisfaction level of the supplier. A harsh buying team can and would impair the relationship between a buyer and a seller. Such repaired relationship does not augur well for the buying organization. The Seller would continue to remain a seller to the organization as long as they are dependent on the buying organization. As soon as opportunities arise, such disgruntled selling organizations would desert the buying organization which could cause damage to buying organization’s operations. Hence it is recommended that the Personnel relationship level and the satisfaction element arising out of it be a part of the overall satisfaction level computation. Some of the questions that can be framed to capture this factor (illustrative only) are given below: (collected on a five point scale ranging from “Strongly Agree” to “Strongly Disagree”.)
2] The Strategic factor: The sense of belonging for suppliers and therefore their satisfaction level and consequently their contribution as a key stake-holder gets heightened only when they are also associated in the buying organization’s growth plan. Where a buying organization is strategizing it growth, it is not possible for it to do so in isolation, at the cost of excluding its supplier-partners. Unless otherwise suppliers are bought on board, a Buyer’s growth plans can go awry - if the growth of the seller is not melded with that of the buyer. Otherwise all the plans of the buying organization will remain stunted because the sellers have not planned their internal activities to synchronize with the buyer’s plans. We list below a set of questions (not exhaustive) which can be used to assess the satisfaction level of the suppliers as it probes into how the buying organization factors a supplier in its growth strategy. The response can be collected on a five point scale ranging from “Strongly Agree” to “Strongly Disagree”
3] The Operational factor While the Personnel and strategic factors are important aspects of supplier satisfaction it is the operational aspect of the buyer-seller relationship that influences more the satisfaction level of the suppliers. The operational factors are faced by the supplier order-to-order and almost on a daily and routine basis. The operational factors have to reckon with the buying process of the buying organization, legal and contractual interfaces of the relationship, among other matters. Since the gamut of this factor covers an extensive range, it is required that to assess the satisfaction level of this factor a wider spread of questions would have to be asked by the buyer covering the range of the interaction between the buyer and the seller that comes into play during the execution of supplies by the seller. The buying process would comprise of the method by which the requirements are communicated from the seller to the buyer, how the ordering prices are finalized and how purchasing orders are released by the seller and how the supplies are received, accepted and paid for. The contractual issues would cover the delivery periods, penalties associated with each order towards performance of the contract, and performance of the supplies. We give below a sample set of queries which can be used to quiz the supplier to gain data about the seller’s satisfaction level with respect to the operational factor. Here also the measurement scale could be a five-point scale collecting the response from “Strongly Agree” to “Strongly Disagree.” Or from “Highly Satisfied” to “Highly Dissatisfied”.
Analysis of the response to individual question would throw up specific areas for improvement. C] Live Questionnaire Based on this model, a live-questionnaire was developed. The actual questionnaire covered the following aspects: C.1] The Operational Factor: 3 questions on the enquiry process:- Whether the enquiry specifications are clear and unambiguous? Whether the enquiries are received in full with all attachment intact? Whether the time given for the bidding is sufficient? 1 question on the bidding process:- Whether the bidding process is fair and transparent? 5 questions on the ordering process:- Whether post-enquiry clarifications are provided immediately and to the full satisfaction of the supplier? Whether the orders are clear and unambiguous in the first instance itself? Whether the time taken to convert an inquiry to an order is reasonable? Whether the orders are received with the agreed conditions only or with new conditions introduced? Whether the delivery period given in the order is reasonable and is in line with the offer made by the supplier? 3 questions on the satisfaction levels with the terms and conditions of the purchase order covering:- Payment terms, Liquidated Damages condition, and Risk Purchase condition. 1 Question on post-order process:- Whether time spent on getting approvals demanded in the order is reasonable? 4 questions on pre-dispatch inspection:- Whether the time taken post the readiness of the ordered goods is reasonable? Whether the Quality Control Inspectors representing the Buyer are knowledgeable and whether new requirements are added-on at the time of inspection? Whether the process of getting the Quality Controllers is easy and simple? And is the preference is for Inspection by the Buyer or the Buyer’s representative (third party)? 1 question on post inspection process:- Whether the dispatch clearances and document required thereof are provided by the Buyer on a timely basis. 2 questions on post-dispatch activities:- Whether the materials receipt and acceptance are made in a timely fashion at the Buyer’s end? Whether the logistics arrangement to be made by the Buyer is made quickly after the Inspection? 4 questions on payment mechanism:- Whether the documentation required to be submitted for getting payment after supply is simple and easy? Whether the time taken for processing the bills is reasonable? Whether if any deficiencies are there in the submitted bill, they are resolved quickly by the Buyer? Whether activities required by the Buyer in processing the bills are done promptly without any delay? 2 questions on IT enabled procurement:- Whether the e-procurement process improves the procurement process efficiency and About the comfort level of the supplier with e-Reverse Auction buying. 2 questions on Rating Process:- Whether performance rating feedback is given by the Buyer to the Seller regularly and Whether the performance rating system is simple, fair, transparent, robust and scientific? C.2] The Strategic factor 4 questions are framed to capture this factor. Whether the supplier is treated as a business partner? Whether the business plans are shared routinely? Whether the supplier is involved in new product development or product improvement by the buyer and is the buyer is involved in the design and manufacturing capability improvement of the supplier? Whether the level of data shared by the buyer is adequate? C.3] The Personnel Factor 2 questions are used. Whether the dealing officers are prompt in answering the phone calls / replying / responding to mails / giving clarifications and are courteous in their dealings? Whether Senior officers are available, approachable and they are able to solve problems faced and are sensitive to the needs of the supplier and visit the works of the suppliers regularly? The response to all the questions was captured on a 5 point scale. The questionnaire was administered to a sample of 155 suppliers of a large engineering organization covering a variety of suppliers – Micro, Small, Medium and large scale industries manufacturing raw materials (like steel plates etc.) and components. Small traders and dealers were also included into this sample apart from manufacturers. D] Outcome The response was statistically analyzed. The sampling adequacy was found to be 0.868 The Cronbach Alpha was found to be 0.933 All the variables were found to be significant. A perception evaluation question was also included in the questionnaire asking the supplier to rate the buying firm on a scale of 1 to 5 ranging from the “Best” to the “Worst”. The correlation between the composite score and the perception score was found to be good. E] Conclusion: The tool can be used reliably for estimating the supplier satisfaction level.
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