Introduction to SCM-honors
Lei Zhang (Alice)
Case # 10: Heartland & Company
1. I think there are at least two advantages of basing a supplier’s overall evaluation on its lowest performance. First of all, it is a simple way to exclude poorly performed suppliers. Since Heartland & Company could have a list of thousands of potential suppliers that need to be evaluated, this method could save a lot of time for managers to pick up a handful of qualified suppliers. Moreover, according to “Liebig’s law of the minimum”, the growth is usually controlled by the scarcest resource, just like the water available in a barrel is determined by the shortest stave. That is, the overall quality of one product can be hit by the …show more content…
Certified (3.5 – 4.5) – suppliers are outstanding in certain aspects, and they could be potential partners of the company.
Conditional (2.5 – 3.5) – suppliers need improvement in their products.
Unacceptable (less than 2.5) – suppliers dropped from the list of potential partners.
Under such weighted-points evaluation system, Heartland & Company evaluates potential suppliers more accurate than based on the lowest performance. Basically, this system has three advantages. First of all, weights designed for each key dimension clearly show the priorities of Heartland & Company. Secondly, the suppliers rating scale is numerical instead of literal, so that the scores of each company for each dimension are more straightforward. Thirdly, the calculation of overall scores, along with the levels (preferred, certified, conditional, unacceptable) these scores suggest, sends managers a clear message if suppliers should be dropped or considered as potential partners.
4. If the overall quality of one company is highly rated, and its products are distinguished from those of other companies, then a price premium should be granted. For example, New