Supplier Performance Appraisal

Supplier Performance Appraisal

(Proposal)

OBJECTIVES

Investigating suppliers perception of Supplier Performance Appraisal,

Identifying Problems associated with Supplier Performance Appraisal and ways of minimizing them as encountered by the parastatal sector as well as the suppliers.

Establishing the benefits of Supplier Performance Appraisal to the parastatals as well as to be suppliers and how it enhances suppliers' and parastatals' performance.

To recommend ways to improve the current performance appraisal systems at Parastatals.

Problem Statement

The purpose of this research project is to investigate how suppliers as well as procuring companies perceive Supplier Performance Appraisal, and to establish problems that are associated with supplier performance appraisal and ways of minimizing them; and making Supplier Performance Appraisal work for the Parastatal sector as well as the suppliers, in order to establish the benefits of Supplier Performance Appraisal to ensure that procuring companies' and suppliers' performance can be enhanced for the benefit of the parastatal sector as well as the supplier companies.

Research Questions:

Summarize the different ways in which suppliers and procuring companies perceive Supplier Performance Appraisal?

What are the problems associated with Supplier Performance Appraisal as experienced by suppliers and procuring companies and how can they be overcome?

Are there any benefits to carrying out Supplier Performance Appraisal? If so what are they?

How can Supplier Performance Appraisal be used to enhance suppliers' as well as the procuring companies' performance?

Literature Review

In the broad business and management, economics and accounting literatures it is widely accepted that a prerequisite for a successful implementation of the corporate, business and operations strategies of an organisation and for any improvement initiative, is the use of a reliable performance measurement system. Being such a fundamental issue of management of organisations, performance measurement has been one of the main concerns for managers and academics.

The operations management literature on performance management suggests that performance should be always measured against benchmarks (Slack et al., 2004). These could be:

Historical standards. Measure against previous performance.

Target performance standards. They reflect some level which is regarded as appropriate or reasonable.

Competitor performance standards. Compare performance against competitors.

Absolute performance standards. It takes performance on theoretical limits.

Traditionally many of the performance measurement systems were designed within the academic discipline of accounting since the main strategies of organisations for many decades was price competition and cost reduction (at least in the western world) (Hayes et al., 1988). These models have been criticised as being one-dimensional and simplistic (Johnston and Kaplan, 1987), having an effect in motivating managers to behave opportunistically (Emmanuel et al., 1990), and being short-term oriented and backward looking (Van Looy, 1999). Kaplan and Norton (1993) for example state:

… traditional financial measures report on what happened last period without indicating how managers can improve performance in the next (p. 134).

In that direction Kaplan and Norton (1992) provided a balanced scorecard (BSC) framework that integrates operational, financial and customer satisfaction perspectives to measure the performance of organisations. Based on the BSC several other integrated frameworks were developed; one of the most notable is the European Foundation for Quality Management Quality Award (EFQM) which also takes a balanced approach to ...