Using Vendor Capacity Planning In Supplier Evaluation

Abstract

In recent years, manufacturing firms increasingly have adopted some type of computer‐based material requirements planning system for purposes of scheduling production and managing inventories. Such systems can have a significant influence on the modification of a firm's purchasing philosophy—and subsequently on the development of its purchasing strategies. In the context of this changing environment, this article discusses the vendor capacity planning concept and its potential use in the evaluation of supplier performance. The authors propose the development of several system refinements that facilitate its use in supplier evaluation, providing additional dimensions of performance that can be used to monitor supplier activity over time. The proposed application takes advantage of significant information that can be developed in a vendor capacity planning system to enhance long‐range purchasing effectiveness.