Analyzing variation in supplier delivery performance to prioritize supplier development efforts

The delivery performance of suppliers has significant impact on a manufacturer’s ability to meet its customer delivery expectations. The concept of enhancing the ability to deliver products on time is a critical competitive strategy for a manufacturing organization. However, the focus of most supplier development efforts is primarily on the average values of the delivery performance metrics and few efforts have been conducted to investigate the variation within the supplier delivery function. It is the variability in supplier delivery performance that hampers manufacturer’s competitiveness due to resulting excessive inventory, wasted resources and long lead-time. The multiple sources of this variability have made it even more profound as it is propagated over multiple parts from multiple suppliers. This paper proposes a model that utilizes simulation modeling within a Bill of Materials (BOM) structure to perform statistical analysis to prioritize supplier development efforts according to their impacts on manufacturer’s performance. A case study is presented based on applying the proposed model to an assembly-based system.