Competition among companies in the industry motivates organizations to leverage their internal and external competencies to gain a competitive advantage. The business's suppliers are an example of an external source of competitive advantage. Many organizations have advanced in their desire to boost efficiency and cut costs through outsourcing, increasing the need to rely on supplier technologies and capabilities, resulting in a proportional relationship between firm performance and supplier assessment and selection. A lot of the research done on the assessment and selection methods used by companies are devoid of the relationship between the performance of the enterprise and the selection and assessment criterion. The paper will analyze the relationship between the business performance and the assessment and selection attitudes of US and European leaders (Kannan & Tan, 2003).
Supplier selection
There is a high percentage of correlation identified for both the European and American firms when considering their attitudes on the subject matter of supplier selection. The two categories emphasize operational performance, especially the commitment to quality, capability and in time delivery performance. According to statistics, it is noted that American companies prioritize commitment to quality and due date performance over other criteria of selection. However, European businesses do not mimic the same trend as their American counterparts. Another correlation is in the identification of the least significant factors in supplier selection. The least significant items of selecting suppliers are the method relating to buyer and seller, for instance, the geographical and cultural fit; utilization of subcontracting and the size of the supplier (Van der Rhee, Verma, & Plaschka, 2009).
The two categories of managers have statistically shown that there are a few cases of the differences between them based on the specific selection criteria. American managers have a hierarchical system that puts the various items of selection into an order of decreasing mean difference. The firms emphasize the transparency in evaluating sites, financial stability, litigation and insurance history, the extent of supplier selection, order entry system of suppliers, ethical standards and meeting due dates. Four of the selection criteria represent integrity and character. The performance of the European and American firms mostly depends on the "soft" items of selection such as integrity, character, and commitment but managers usually value price or cost when evaluating the suppliers for selection (Kannan & Tan, 2003).
Supplier assessment
The different methods used to assess the performance of the various suppliers are shared by both the American and European enterprises. In fact, there is a close relationship between the two on the significance of the methods used in assessing the supplier. According to research done by more than 100 firms from Europe and America, the highly ranked assessment criteria or measures include on time delivery, quality, responsiveness, and service. Enterprises in America put a higher priority on the listed measures over other evaluation criteria while the European firms do not share the same attitude toward the supplier analysis (Kannan & Tan, 2003). The least performance method of vendor analysis common to enterprises in the two regions is the Electronic Data Interchange (EDI) and the sharing of sensitive company information with other firms and the general public.
Mathematically, the mean scores attached to the two lowest performance criteria are the lowest compared to the other assessment methods ranked highly by managers. Five metrics of performance which are statistically rated higher than other metrics are valued on a ranked list that is listed in a decreasing order of mean difference. The order is as follows; service level, timely delivery, delivery of the right quantities, the flexibility of the supplier to evolution and creation of new products and quality. The American enterprises give priority to the five performance measures while European firms put a lesser emphasis on the same measures (Van der Rhee, Verma, & Plaschka, 2009).
Therefore, it is evident that a company that makes serious supplier assessment based on established measures such as on time delivery and quality have a higher chance of improving their business performance as continued competition has pushed many firms to outsource thereby putting suppliers in a critical chain of product and service production. Nowadays, the enterprises consider the suppliers to be an extension of the company's operations, and great effort is put in the assessment of the vendor's performance over the years when selecting them for routine company supply requirements. As more companies are becoming dependent on suppliers, their importance of the manager's attitudes towards them is valuable to any organization.
Conclusion
The research shows that European and US business leaders prefer assessing and selecting suppliers based on objective characteristics such as cost, delivery, quality, and service. The managers neglect the "soft" characteristics such as supplier commitment which is, in fact, more important than the objective characteristics. According to the recent studies, subjective criteria for selecting and assessing suppliers has more influence than objective criteria such as the price on the performance of the enterprise. However, most managers depend mainly on the cost and price in supplier selection. However, there is a difference in the attitudes of the US and European managers where the American business organizations have a strong connection between their performance and the attitude toward management of supply. On the other hand, European firms do not have a strong connection between performance and suppliers (Kannan & Tan, 2003).
References
Kannan, V. R., & Tan, K. C. (2003). Attitudes of US and European managers to supplier selection and assessemnt and implications for business performance. Benchmarking: An international journal, 10(5), 472-489.
Van der Rhee, B., Verma, R., & Plaschka, G. (2009). Understandingtrade-ffs n the suppplier selection process: The role of flexibility, delivery, and value-added service/support. International Journal of Production Economics, 30-41.
