$\backslash$begin$\{$tabular$\}\{|$c$|$c$|$c$|$c$|$c$|$c$|\}$

$\backslash$hline $\backslash$multirow$[$t$]\{2\}\{*\}\{$Performance Criteria $($last $12$ months$)\}$ & $\backslash$multirow$[$b$]\{2\}\{*\}\{$Non$-$Performance Costs$\}$ & $\backslash$multicolumn$\{4\}\{|$c$|\}\{$Supplier$\}\backslash \backslash$

$\backslash$hline & & Vision Plus & Digicam & ICU Tech & Clearpic $\backslash \backslash$

$\backslash$hline Purchase Volume $($units$)$ & & $650,000$ & $550,000$ & $450,000$ & $350,000\backslash \backslash$

$\backslash$hline Unit Price $(\backslash$$$)$ & & $9\mathrm{.}25$ & $8\mathrm{.}95$ & $9\mathrm{.}80$ & $10\mathrm{.}05\backslash \backslash$

$\backslash$hline Delivery Cost $(\backslash$$$/$unit$)$ & & $0\mathrm{.}60$ & $0\mathrm{.}75$ & $0\mathrm{.}70$ & $0\mathrm{.}85\backslash \backslash$

$\backslash$hline $3-$Year Price Inflation $($annualized $\backslash \%)$ & & $\backslash (1\mathrm{.}0\backslash \%\backslash )$ & $\backslash (2\mathrm{.}0\backslash \%\backslash )$ & $\backslash (0\mathrm{.}5\backslash \%\backslash )$ & $\backslash (1\mathrm{.}5\backslash \%\backslash )\backslash \backslash$

$\backslash$hline Defect Rate $($per $1,000)$ & Rework $/$ replace cost $\backslash$$$26/$ unit & $8$ & $11$ & $4$ & $9\backslash \backslash$

$\backslash$hline Received Damage Rate $($per $1,000)$ & Disposal $/$ credit recover cost $\backslash$$$18/$ unit & $12$ & $16$ & $8$ & $10\backslash \backslash$

$\backslash$hline Order Fill Rate $(\backslash \%)$ & Every $1\backslash \%$ point below $99\backslash \%$ adds stock$-$out recovery cost of $\backslash (\backslash$$ $0\mathrm{.}06/\backslash )$ unit to all units $(\backslash (\backslash$mathrm$\{$n$\}/\backslash$mathrm$\{$a$\}\backslash )$ if $\backslash (>=99\backslash \%\backslash ))$ & $95$ & $93$ & $97$ & $92\backslash \backslash$

$\backslash$hline On$-$Time Delivery $(\backslash \%)$ & Every $\backslash (1\backslash \%\backslash )$ point below $\backslash (96\backslash \%\backslash )$ adds expedite cost of $\backslash$$$0\mathrm{.}03/$unit to all units $(\backslash ($ n $/$ a $\backslash )$ if $\backslash (>=96\backslash \%\backslash ))$ & $92$ & $89$ & $95$ & $91\backslash \backslash$

$\backslash$hline Process Improvements initiated by supplier $(\backslash$#$)$ & & $4$ & $0$ & $2$ & $1\backslash \backslash$

$\backslash$hline Technical Advances initiated by supplier $(\backslash$#$)$ & & $5$ & $2$ & $4$ & $0\backslash \backslash$

$\backslash$hline $\backslash \%$ electronic purchasing transactions & & $85$ & $60$ & $75$ & $30\backslash \backslash$

$\backslash$hline

$\backslash$end$\{$tabular$\}$

Assignment Questions $(50$ pts$)$

$1)$ Calculate the supplier performance index $($SPI$)$ for each supplier, inclusive of delivery costs $-$ round to $3$ decimal places. $(15$ pts $)$

$(10$ pts$)$

$3)$ Produce a weighted point system evaluation matrix for these suppliers. $(10$ pts$)$

a$)$ Use primary categories of Cost, Quality, Service, and Innovation $-$ determine your own sub$-$categories.

b$)$ Determine your own weighting and scoring criteria

$4)$ If your goal is to rationalize and consolidate your purchasing volume across only $2$ suppliers, provide at leaast $3$ reasons to justify which $2$ supplier you would recommend keeping? Based on your adjusted $($for SPI and inflation$)$ pricing from Question $2,$ what will be your annualized savings $\backslash$$ $($split the full volume $60/40$ between your selected $2$ remaining suppliers$)?(10$ pts $)$

$5)$ For the $2$ suppliers that you choose, identify at least $3$ areas $($for each of the $2$ suppliers$)$ in which you can challenge them for further savings and$/$or continued performance improvement? $(5$ pts$)$ Assignment $\backslash$#$2$

Supplier Performance Evaluation

As Purchasing Manager for a leading manufacturer of high end wireless security monitoring systems, you've been challenged by VP of Supply Chain to improve the cost and reliability of supply for the core digital camera device for your company's security systems. Recent complaints from your top customer has escalated supplier performance as a key strategy for the coming fiscal year. Coming out of a recent off$-$site strategy meeting, the executive team believes that a key step in the supplier improvement process will be to more fully evaluate and potentially rationalize the number of suppliers currently supplying the camera device.

You currently purchase camera devices from four $(4)$ suppliers to ensure competitive pricing. However, despite the success you've realized in minimizing inflation for these devices and recognition you've received from your manager, in your last performance review you acknowledged to your manager that the number of complaints you've been receiving $($formal and informal$)$ has increased notably over the last $6$ months. At the conclusion of your performance review, you and your manager agree that a more robust evaluation system is needed to more completely evaluate supplier performance and ultimately the true cost of doing business with them.

$\backslash (<mtext\; id="EditorElement\_2158462"></mtext><mi\; id="EditorElement\_2158463">\backslash </mi><mi\; id="EditorElement\_2158464">)</mi>$ Fast forward $3$ months$>$

Your company has been tracking supplier performance measures for years in the categories of cost$,$ quality, service, and innovation $-$ the last $12$ months' data for the $4$ suppliers of digital cameras is in the table below. With the increased emphasis on total performance, you know the traditional metrics aren't going to be good enough to make a fully informed assessment of the suppliers' performance. With the help of one of your peers in the Cost Accounting group, you were able to calculate costs of nonperformance as well.