Supply Chain Financial Management: Best Practices

Worldwide Sourcing Applications Introduction
This paper reviews the Chapters 12 to 16 of Robert’s (2016) book – Supply Chain Financial Management: Best Practices, Tools, and Applications for Improved Performance - and the concepts therein aid in presenting below the concept of Cost Based Supplier Evaluation system models such as Total Cost of Ownership (TCO) and Supplier Performance Index (SPI).

Performance Measurements and Metrics: An Analysis of Supplier Evaluation
Arsan (2011) describes several methods for the performance measurement of suppliers:
• Categorical System
• Weighted Point Method
• Cost-Based System
Here, we shall review the concept of the Cost-Based Supplier Performance Measurement models. Cost-Based Supplier Performance

Although the cost-based supplier performance measurement (SPI) model appear to be an ideal way of dealing with costs and good suppliers, it is difficult to identify and document the costs of supplier non-performance (Arsan, 2011). In spite of their subjectivity and drawbacks, the category method, the weighted-point method and the cost-ratio (SPI) method are the most widely used techniques in supplier evaluation due to their ease of implementation (Arsan,

Global risks, Inventory carrying charges and unavailable local customer service need to be part of the supplier evaluation strategy equations; Zara’s strategy to co-locate its design, production centers and markets, ensured supplying its clientele with trendy yet low-volume products, thus creating efficiencies that helped sustain its market leadership in its highly competitive and time sensitive Hi-Fashion industry (Rice, 2014). The world may be moving from a global manufacturing strategy, which traditionally focused on low cost countries, to regional manufacturing strategy; this may be mainly due to low gas prices (fracking innovations, etc.) forcing companies to see cost advantages of local manufacturing, better quality, usage of improved automation, lower risk vs long distance shipping and larger inventories (Simchi-Levi, 2015). Reebok provided a responsive supply chain via Nearshoring and product redesign – these examples reiterate that one of the main factors of a product’s success and long term sustainability are its innovative, collaborative and agile