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									             EVALUATION OF SUPPLIERS’ CAPABILITY AND PERFORMANCE:
               A CASE STUDY ON ELECTRONIC COMPANY IN THAILAND

                                                            by


                                              Patcharaporn Neammanee
                                              Faculty of Applied Statistics
                                     National Institute Development Administration
                                            Bangkrapi, Bangkok, Thailand
                                                   Fax: +662- 3744061
                                          Email: patcharaporn@as.nida.ac.th

                                                            and

                                               Walailak Atthirawong
                                        School of Statistics, Faculty of Science
                                  King Mongkut’s Institute of Technology Ladkrabang,
                                              Bangkok 10520, Thailand
                                                 Fax: +662- 3264305
                                       Email: walailak.atthirawong@gmail.com


                                                       ABSTRACT

         Given that electronic industry has been one of the businesses with rapid growth and soaring competition
nowadays, production of supplies in response to customers’ demands according to quantity and quality required in good
time is crucial. In addition, all parts in manufacturing process and technologies applied are numerous. Thus, decisions
on suppliers to procure raw materials and carry out production in line with specifications and quantities required and to
deliver the products on time are necessary. This paper is intended to develop supplier evaluation criteria for a case
company in the electronic industry and to suggest the implementation guidelines for selection of the right suppliers for
the case company.

KEYWORDS
Electronic Industry, Supplier, Capability, Performance


                                                   INTRODUCTION

         A critical reason nowadays is to facilitate the development process and introduction of the advanced-technology
products in order to enhance a firm’s competitive advantage from changes. Recently, the semiconductor industry has
been developed so rapidly to one of the major industries in Thailand. In the complex IC process, since hundreds of raw
materials are purchased from a number of suppliers, it is important to improve supply chain management, especially in
supplier management. Of hundreds of raw materials purchased, wafers are the most important for semiconductor
manufacturing, for they are what a completed chip is based upon. In addition, wafers must undergo multiple processes
before becoming a finished product. Quality of raw bare-wafers strongly impacts performance of the IC device such as
yield and reliability. Hence, the researchers have taken the category of wafer supplier as example for case study by using
Factor Rating Scale method to rate the periodical performance. Then supplier ratings for chemicals, specialty gases,
quartzes, metal targets, photo masks, etc. can also be obtained by the same methodology.

          Generally, there are a variety of wafer suppliers, each of whom has offered different sizes and types of wafers.
However, for wafers of 200 mm and 300 mm, at present, there are only five major manufacturers left in the world due to
the barriers of huge foreign investments, high technology threshold, and great research and development requirements.

          For a local company producing and distributing the Radio Frequency Identification (RFID) chips, the objective
of this research is to develop the supplier evaluation criteria and to prepare the Microsoft Excel Spreadsheet together with
the supplier selection handbook so as to enhance the work-efficiency as well as to develop the criteria that will support
the parties concerned in decision-making. Presently, as the company still lacks the right criteria for supplier evaluation,
all criteria mandatory for decision making on supplier selection have not been completely ascertained resulting in the late
transfer of the goods to the customers.


                                               LITERATURE REVIEW

          Supplier evaluation and selection problems have been extensively studied. Different decision-making
approaches are proposed to tackle the problem. In contemporary supply chain management, performance of potential
suppliers has been evaluated against multiple criteria rather than determination based on a single factor, i.e. cost. Vendor
selection and evaluation is one of the most decisive proceedings of companies. Supplier selection is traditionally relied
on invoiced cost, supplier's ability to meet quality requirements and delivery schedules. Supplier–customer relationship
literature has developed descriptive and normative models due to more acceptance of the lean supply concept and the
paradigm of the lean production as well as the large numbers of organizational and managerial modifications developed
in the vendor-rating systems.

          Two basic issues to highlight are the generalized tendency to enlarge the set of evaluative attributes and the
development of sophisticated supplier choice models. Regarding the first issue, traditional vendors have focused on a
“technical” output evaluation in terms of quality, delivery speed and reliability, and price offered, but when the
relationship becomes closer and longer, the numbers of selection criteria increase and vendors are selected on their global
performance. Global evaluations range from total costs analysis (Roodhooft and Konings,1996) to the consideration of
supplier's capacity in production planning (Ho and Carter, 1988), their future manufacturing capability (Ellram,1990) or
the closeness of the relation and continuous improvement capabilities (Choi and Hartley, 1996). In strategic evaluations,
technological, financial and organizational capabilities are considered together with technological and strategic
coherence. Ashutosh and Pratap (2006) defined two important dimensions of a supplier's abilities: performance and
capability. Performance is defined as the demonstrated ability of a supplier to meet a buyer's short-term requirements in
terms of cost, quality, service and other short-term criteria. Capability is defined as the supplier's potential that can be
leveraged to the buyer's advantages in the long term.


                                                   CASE COMPANY

         In this study, a company producing and distributing Radio Frequency Identification (RFID) chips is selected as a
case company. Supply chain structures of the case company are divided into 3 parts i.e. 1) company 2) suppliers and 3)
customers. Production process of the studied company is 100% outsourced starting from having one supplier produce
wafers and then to be forwarded, after finished, to another supplier for packaging. Suppliers of the case company have 4
obligations i.e. 1) purchasing raw materials for production 2) maintaining raw materials 3) producing products and 4)
storing excessive finished products. After this, the researchers will use the term “Supplier” in reference to those with 4
obligations as aforesaid in the company’s supply chain structures.

          Currently, the case company has approximately 124 suppliers. Of all these, 10 of them are suppliers with high
production-hiring value. As regards the company’s customers, there are both those existing customers who regularly
place the orders for production with great demand of products at all times and the new customers as acquired through the
salespersons of the company with less demands for the supplies. Given the case company’s entire outsource production
process with rather long lead time and 10 regular suppliers with high production-hiring value, while the company still
lacks the effective supplier evaluation criteria, all criteria mandatory for decision making on supplier selection have not
been completely determine. This will affect the company confronting the lasting problem of late delivery of the products
to its customers.

          Accordingly, development of the right supplier evaluation criteria is essential for management of the company’s
logistics and supply chains, for this will not only enable the company to promptly deliver the quality goods but will also
reduce its operating costs on the whole.
                                              OPERATING PROCEDURES

Evaluation Criteria Development

          Evaluation criteria development processes that the researchers have worked in cooperation with the company
are as follows.
          1)       Collecting all relevant data to set up supplier evaluation criteria by interviewing the specialists and the
                   management concerned
          2)       Establishing the main and the sub criteria for supplier evaluation
          3)       Setting importance level of all criteria as weights, which will be varied in line with the importance of
                   those criteria. As for each electronic product type, there may be different weights in each criterion,
                   which the company can adjust according to product types and business conditions then.
          4)       Scoring in accordance with each supplier’s criteria
          5)       Comparing weighted total scores of each supplier in order to find the best supplier according to the set
                   up criteria

         The researchers held a meeting with the company’s management, specialists, and staff members to jointly set up
the supplier evaluation criteria. The supplier selected by the case company for production service engagement must be
the one that passes all evaluation criteria and gains the top total scores.

Main and Sub Criteria

         According to data collection of the case company through interviews, inquiries, and uses of data in the database
for development of the supplier evaluation criteria, it was found that in supplier selection, the company has stressed on
the 7 main criteria with sub criteria as follows.

         Main Criteria 1: Product Quality

         The products that the supplier will produce for the case company are RFID chips. Good quality of the RFID
chips produced by the supplier must be fitting in all dimensions i.e. width, length, and thickness. It came out that some
suppliers are incapable of producing extremely slim RFID chips or their chips have lower performance than those
produced by other suppliers. Sub criteria for product quality therefore include:
         -    Physical form
         -    Performance

         Main Criteria 2: Product Cost

        Product cost consists of 2 major components i.e. (1) product cost and (2) transportation cost from suppliers to
customers. In case of overseas customers, transportation cost of products to abroad either by ship or by air will depend
on urgency and quantities required by the customers. Sub criteria for product cost therefore involve:
        -    Product cost
        -    Transportation cost

         Main Criteria 3: Supplier Location

         All production suppliers of the company are approximately 124, some of which are located in foreign countries
e.g. China, India, Japan, etc. while some others are located in Thailand. Local or overseas supplier selection possibly
causes communication problem between each other in respect of product cost, product specifics, suppliers’ response
time and complete information responded. In case of selection of a new production supplier, whose information is not
yet recognized, the company may either request sample goods for trial or send its officers to investigate the suppliers’
product lines too. Thus, supplier location is important to supplier selection for products manufacturing. Sub criteria for
supplier location will include:
         -     Supplier’s response time
         -     Complete information responded by supplier
         -     Convenience for investigation
         -     Accessibility to product line setup
         Main Criteria 4: Supplier Service & Support

          The case company needs the supplier to produce products to meet customers’ demand both in quantity and
quality aspect as well as to deliver the products on time. The company is therefore necessary to check production state
to see whether there are any problems or difficulties so that it could find the solutions and confirm products transfer to
its customers. Another major obligation of the suppliers is to store enough inventories to meet production needs of the
company. However, such inventories must be maintained not so many that they engender the risk of damage or become
outdated. In the event of dead-stock piling situation, the company will also take part in responsibility for this expense.
Consequently, the company needs the suppliers to submit related information or reports to enable the company to
manage the production and transfer the products to its customers. Sub criteria for supplier service or support therefore
comprise:
         -    Daily production report
         -    Daily inventory report
         -    Delivery on time

         Main Criteria 5: Supplier Technology

          In the RFID chips industry, suppliers have to select good-quality raw materials and use high technology in all
production processes. Furthermore, the products to be produced are always varied upon the customers’ demands. As a
result, production technology the suppliers use needs to correspond with the customers’ specifications as well.
Therefore, sub criteria for supplier technology encompass:
         -     Correspondence with specifications
         -     Covering all processes
         -     Technology advance
         -     Raw material grade

         Main Criteria 6: Production Capacity

          As total demand for the products of the case company are continually growing every month, supplier’s
production capacity as arranged for the company may not meet with the customers’ demands. Thus, selection of
supplier who is capable of producing products in line with the quantities required and products delivery on schedules is
vital. Some suppliers need forecast quantities of products to be produced 2-3 months beforehand in order to allow them
to produce goods as per quantities required and to transfer them according to schedules. Meanwhile, some other
suppliers have more capacity flexibility, so they need not to know earlier the total quantities forecast of the products to
be produced. The latter case helps reduce the work related to product quantities forecast for the company. Sub criteria
for supplier’s production capacity therefore comprise:
         -     Compatibility to meet customer demand on time
         -     Capacity flexibility

         Main Criteria 7: Privileges from Board of Investment (BOI)

        Any supplier having presently obtained promotion from BOI will also cause the case company to get the BOI’s
approval for privilege of those suppliers as well such as reduction of juristic person income tax, for instance.

        Based on all 7 main criteria and other sub criteria, supplier evaluation of the case company can be illustrated as
shown in Figure 1.
                                           FIGURE 1
                       SUPPLIER EVALUATION CRITERIA OF THE CASE COMPANY




Criteria Weights

        After establishment of the main and the sub criteria for supplier evaluation of the case company is completed,
importance of each criterion will be determined as weights which will vary upon importance of those criteria or product
types. Determination on the weights of the main and the sub criteria for evaluation of the supplier producing the RFID
microchips for the case company is shown in Table 1.

                                     TABLE 1
        DETERMINATION ON THE WEIGHTS OF THE MAIN AND THE SUB CRITERIA FOR
    EVALUATION OF THE SUPPLIER PRODUCING RFID MICROCHIPS FOR THE CASE COMPANY

                            Supplier Evaluation Criteria                             Main          Sub Criteria
                                                                                    Criteria         Weight
            Main Criteria                          Sub Criteria                     Weight
                                     Physical form                                                      0.50
     1. Product Quality
                                     Performance                                      0.20              0.50
                                     Product cost                                                       0.90
     2. Product Cost
                                     Transportation cost                              0.15              0.10
                                     Supplier Response time                                             0.25
                                     Complete information responded                                     0.25
     3. Supplier Location                                                             0.15
                                     Convenience for investigation                                      0.25
                                     Accessibility to product line set up                               0.25
                                     Daily production report                                            0.15
                                                                                      0.10
     4. Supplier Service or                                                                             0.15
        Support                      Daily inventory report

                                     Delivery on time                                                   0.70

                                     Corresponding with customers’                                      0.30
                                     specifications
     5. Supplier Production                                                           0.20
                                     Covering every process                                             0.30
        Technology
                                     Technology advance                                                 0.20
                                     Raw material grade                                                 0.20
     6. Supplier Production          Production capacity to meet customers’
                                       demand on time                                     0.10              0.70
          Capacity
                                       Capacity flexibility                                                 0.30
        7. Privileges from BOI                                -
                                                                                          0.10

         However, the case company is still entitled to adjust both the selection criteria and the weights of each criterion
for more appropriate afterwards.

Scoring Principles

         To score each supplier according to all criteria without definite scoring principles, should two suppliers are
assessed by different groups of engineers with evaluation results of both suppliers to be compared with each other and
ended by the supplier with the highest score being selected, such judgment may not be fair and possibly cause mistakes.
Accordingly, scoring should be done based on the same principles. As regards the case company, scoring principles of
the company are as follows.

Main Criteria 1: Product Quality

           Sub Criteria 1) Physical form of products – Calculate suppliers’ points form the Process Capability Ratio (Cpk)
Index

          Sub Criteria 2) Performance – Determine based on the read distance of the microchips, if >5% of the normal
distance, suppliers will be scored 7, 8 for >10%, 9 for >15%, and 10 for >20%.


Main Criteria 2: Product Cost

         Sub Criteria 1) Product cost – Compare the product cost with the market price. If equal, suppliers will be
scored 5 points. If product cost less than market price 5%, suppliers will be scored 7, 8 for <10%, 9 for <15%, and 10 for
<20%.

         Sub Criteria 2) Transportation cost – Determine based on supplier location. 5 points for suppliers situated in
Europe, 7 points for those in India, 8 points for those in China or Japan, and 10 points for those in Thailand.

Main Criteria 3: Supplier Location

         Sub Criteria 1) Response time – 5 points for suppliers responding in 4 days, 6 points for 3 days, 7 points for 2
days, 8 points for 1 day, and 10 points for 2 hours.

          Sub Criteria 2) Complete information – Determine based on the number of times the company has to repeat
asking the suppliers either for information clarity or for more information. If the company repeats inquiries 4 times, the
suppliers will be scored 2 points, 3 times 4 points, 2 times 6 points, one time 8 points, and no further inquiry 10 points.

          Sub Criteria 3) Convenience for investigation - Determine based on the distance to travel for investigating the
suppliers. Suppliers who do not allow investigation will gain 5 points. Suppliers located abroad will gain 7 points, 8.5
points if out of town, and 10 points if in Bangkok and surroundings.

         Sub Criteria 4) Accessibility to product line setup – Determine based on whether the company can access to set
up suppliers’ product lines. If inaccessible, the suppliers will gain 5 points, and 10 points if accessible.

Main Criteria 4: Supplier Service & Support

         Sub Criteria 1) Daily production report – Suppliers with daily production report will be scored 10 points, while
those without will gain 5 points.

         Sub Criteria 2) Daily inventory report - Suppliers with daily inventory report will be scored 10 points, while
those without will gain 5 points.
          Sub Criteria 3) Delivery on time – Determine based on the transportation delayed periods. 5 points for
suppliers transporting 30 days late, 6 points for 15 days late, 7 points for 7 days late, 8 points for 3 days late, 9 points for
one day late, and 10 points for delivery on time.

Main Criteria 5: Supplier Technology

          Sub Criteria 1) Correspondence with customers’ specifications – If suppliers need to adjust the customers’
specifications, they will be scored 8 points. Supplier technology that could be substituted for or close to customers’
specifications will gain 9 points. Supplier technology that is compatible with the customers’ specifications will gain 10
points.

         Sub Criteria 2) Covering every production process – Supplier technology that covers only certain production
process will be scored 7 points. Supplier technology covering all processes will gain 10 points.

         Sub Criteria 3) Technology advance – Suppliers with normal advanced-technology will be scored 6 points, 8
points with medium advanced, and 10 points with highly advanced.

         Sub Criteria 4) Raw material grade – Determine based on the standard of supplier location. 6 points for
Chinese standard, 7 points for Indian standard, 8 points for Thai standard, 9 points for Japanese standard, and 10 points
for European standard.

Main Criteria 6: Production Capacity

          Sub Criteria 1) Capacity to meet customers’ demand on time – Suppliers capable of producing 50% of the
quantities required on transfer schedules will gain 5 points. If 60% to gain 6 points, 70% 7 points, 80% 8 points, 90% 9
points, and 100% 10 points.

         Sub Criteria 2) Capacity flexibility – Determine based on the suppliers’ needs for forecast product quantities to
be produced in advance. Suppliers who need to know such forecast for 2-3 months in advance will gain 5 points.
Suppliers who need not to know such forecast will gain 10 points.

Main Criteria 7: Privileges from Board of Investment (BOI) – Suppliers without BOI privilege will be scored 5 points,
but those with BOI privilege will gain 10 points.


                                                  RESEARCH RESULTS

         In this paper, the researchers have developed specific tools for the case company to use in supplier evaluation
as follows.

         1) Microsoft Excel Spreadsheet – To be used for supplier evaluation of the case company as shown in Table 2.
This spreadsheet will be used to compare the weighted total scores of each supplier to make known which supplier is the
best according to the criteria established.
                                               TABLE 2
                                MICROSOFT EXCEL SPREADSHEET DISPLAY IN
                            EVALUATION OF INDIVIDUAL SUPPLIER OF THE COMPANY

                                         Main        Sub                         Supplier             Related
               Criteria                 Criteria    Criteria   Score
                                                                                                       note
                                        Weight      Weight              A    B    C    D    E    F
 Product quality                          0.20
 - Physical / Cpk                                     0.50       10
 - Performance                                        0.50       10
 Product & Transportation Cost            0.15
 - Product cost                                       0.90       10
 - Transportation cost                                0.10       10
 Supplier location                        0.15
 - Response time                                      0.25       10
 - Complete information                               0.25       10
 - Convenience for investigation                      0.25       10
 - Accessibility to product line
   setup                                              0.25       10
 Supplier service & support               0.10
 - Daily production report                            0.15       10
 - Daily inventory report                             0.15       10
 - Delivery on time                                   0.70       10

 Supplier technology                      0.20
 - Correspondence with
   specification                                      0.30       10
 - Covering all processes                             0.30       10
 - Technology advance                                 0.20       10
 - Raw material grade                                 0.20       10
 Production capacity                      0.10
 - Capacity to meet customer
   demand on time                                     0.70       10
 - Capacity flexibility                               0.30       10
 BOI privilege                            0.10                   10
                                                                                                     Max
             Total score                                         10
                                                                                                     score =

          2) New supplier evaluation form together with scoring principles handbook as shown in Table 3 and Appendix
A, respectively, which engineers of the case company can apply to supplier selection for other products of the company
in the future.
                                     CONCLUSION AND RECOMMENDATION

         In this study, the researchers developed a supplier selection evaluation form for the case company, which is one
of the producer-distributors of the Radio Frequency Identification (RFID) chips in Thailand. In conjunction with the
company, the researchers have developed the supplier evaluation criteria by firstly setting the main and the sub
evaluation criteria, then fixing the weights of each criterion, and finally scoring each supplier according to the criteria
established in order to compare the weighted total scores of each supplier.

         Through this, the best supplier with qualifications as required by the criteria will be reached. Furthermore, the
researchers also prepared a Microsoft Excel Spreadsheet as a tool for the parties concerned in the company, e.g.
engineers, to use in supplier evaluation too. Even though the most qualified suppliers has successfully been selected and
the company already engaged them for production service, the company still should follow up the results for further
development of other matters which may possibly become a problem in the future. It is suggested that relationship with
suppliers be managed such as via electronic data exchanges. In addition, the company has to encourage the suppliers to
continuous self-improvement so that they will be capable of producing quality products according to quantities required
on schedules, or they will use advanced technology to create value added to both the company and the suppliers.

         This study has focused on development of the supplier evaluation criteria for the case company. It is now under
follow-up of the results of the implementation of the evaluation criteria and methodology. If the outcome happens as
expected, it may be extended to other companies in this industry squad. For theoretical prospective, the supplier
evaluation methodology as developed in this study may possibly be taken to compare with other methods, for instance,
DEA, Multi-objective Linear Programming (Riccardo and Valeria, 2003), AHP (Yu and Tsai,2008 ), and analytic
network process (Lee, Chang and Lin, 2009).


                                                    REFERENCES

Ashutosh, S. and Pratap, K.J. M., Evaluation of supplier capability and performance: A method for supply base
reduction, Journal of Purchasing and Supply Management, Volume 12, Issue 3, May 2006, Pages 148-163.

Choi, T.Y. and Hartley, J.L., An exploration of supplier selection practices across the supply chain. Journal of
Operations Management, Volume 14 , 1996, Pages 333–34

Ellram, L.M., The supplier selection decision in strategic partnerships. Journal of Purchasing and Materials Management,
1990, Fall, Pages 8–14.

Ho, C. and Carter, P.L., Using vendor capacity planning in supplier evaluation. Journal of Purchasing and Material
Management, Volume 24, Issue 1, 1988, Pages 23–30.

Lee, A.H, Chang, H-J. and Lin, C-Y., An evaluation model of buyer–supplier relationships in high-tech industry - The
case of an electronic components manufacturer in Taiwan, Computers & Industrial Engineering, Volume 57, Issue 4,
November 2009, Pages 1417-1430.

Riccardo, D. and Valeria, M., Supplier selection using a multi-criteria decision aid method, Journal of Purchasing and
Supply Management, Volume 9, Issue 4, July 2003, Pages 177-187.

Roodhooft, F. and Konings J., Vendor selection and evaluation: An activity based costing approach, European
Journal of Operational Research, Volume 96, Issue 1, 1997, Pages 97–102.

Yu, J-R., and Tsai, C-C., A decision framework for supplier rating and purchase allocation: A case in the semiconductor
industry, Computers & Industrial Engineering, Volume 55, Issue 3, October 2008, Pages 634-646.
                                     APPENDIX A
          SUPPLIER EVALUATION HANDBOOK OF SILICON CRAFT TECHNOLOGY CO., LTD.


                                            LOGO




                                            Silicon Craft Technology


         Supplier evaluation has objective to select the best supplier and consists of seven main criteria i.e. product
quality, product & transportation cost, supplier location, supplier service & support, supplier technology, production
capacity, and privilege approved by the Board of investment (BOI).

         Each main criterion was also divided into related sub-criteria. The suppliers will be evaluated against the main
and the sub criteria as detailed below.

1. Product quality has two sub-criteria.

1.1 Physical form – Calculated from the Cpk index.

1.2 Performance – Scoring based on the read distance of chip. If:

         read distance   = normal read distance       , score 5 points
         read distance   ≥ normal read distance 5%    , score 7 points
         read distance   ≥ normal read distance 10%   , score 8 points
         read distance   ≥ normal read distance 15%   , score 9 points
         read distance   ≥ normal read distance 20%   , score 10 points

2. Product Cost & Transportation Cost has two sub-criteria.

2.1 Product cost – To be compared with the market price. If:

         product cost = market price       , score 5 points
         product cost ≤ market price 5%    , score 7 points
         product cost ≤ market price 10%   , score 8 points
         product cost ≤ market price 15%   , score 9 points
         product cost ≤ market price 20%   , score 10 points

2.2 Transportation cost – Scoring based on supplier country. If:
         in Europe           , score 5 points
         in India             , score 7 points
         in China/Japan      , score 8 points
         in Thailand          , score 10 points
  3.Supplier location has four sub-criteria.

  3.1 Response time – Scoring based on the period of time the suppliers replied to the
      inquiries. If:

           within 4 days     , score 5 points
           within 3 days     , score 6 points
           within 2 days     , score 7 points
           within 1 day       , score 8 points
           within 2 hours    , score 10 points

  3.2 Complete information – Scoring based on the numbers of times the company has to
repeat the inquiries. If:

           4 times of inquiries                      , score 3 points
           3 times of inquiries                      , score 4 points
           2 times of inquiries                      , score 6 points
           1 time of inquiries                       , score 8 points
           No additional inquiries                   , score 10 points

3.3 Convenience for investigation – Scoring based on supplier location. If:

           product lines not allowed for investigation                    score 5 points
           located in foreign country.                                   , score 7 points
           located up-country                                            , score 8.5 points
           located in Bangkok & environs                                 , score 10 points

  3.4 Accessibility to product line setup - If:
           inaccessible                              , score 5 points
           accessible                                , score 10 points

  4. Supplier service & support has three sub-criteria.

  4.1 Daily production report – If:
           supplier doesn’t have daily production report.   , score 5 points
           supplier has daily production report.            , score 10 points

  4.2 Daily inventory report – If:

           supplier doesn’t have daily inventory report.    , score 5 points
           supplier has daily inventory report.             , score 10 points

  4.3 Delivery on time – Scoring based on delayed periods of products delivery. If:

           30 days delayed                           , score 5 points
           15 days delayed                           , score 6 points
           7 days delayed                            , score 7 points
           3 days delayed                            , score 8 points
           1 day delayed                             , score 9 points
           no delay                                  , score 10 points


  5. Supplier technology has four sub-criteria.

  5.1 Correspondence with specification – Scoring based on correspondence of supplier
  technology to customers’ specifications. If:

           need to adjust customers’ specifications           , score 8 points
           close to customers’ specifications                 , score 9 points
           corresponding to customers’ specifications         , score 10 points
5.2 Covering all process – Scoring based on supplier technology. If:

         covering some processes                   , score 7 points
         covering all processes                    , score 10 points

5.3 Technology advance – Scoring based on suppliers’ technology advance. If:

         normal advanced                            , score 6 points
         more advanced                              , score 8 points
         most advanced                             , score 10 points

5.4 Raw material grade – Scoring based on standards of supplier country. If:

         Chinese standard                           , score 6 points
         Indian standard                            , score 7 points
         Thai standard                              , score 8 points
         Japanese standard                          , score 9 points
         European standard                          , score 10 points

6. Production capacity has two sub-criteria.

6.1 Capacity must meet customer demands on time – Scoring based on percentage of
suppliers capacity to produce the quantities required on time. If:
          equivalent to 50%                         , score 5 points
          equivalent to 60%                         , score 6 points
          equivalent to 70%                         , score 7 points
          equivalent to 80%                         , score 8 points
          equivalent to 90%                         , score 9 points
          equivalent to 100%                        , score 10 points

6.2 Capacity flexibility – Scoring based on supplier’s need for customer demand
forecast. If:
          need demand forecast 2-3 months in advance              , score 5 points
          no need for such forecast                               , score 10 points

7. Production capacity - If:
        supplier without privilege from BOI                       , score 5 points
        supplier with privilege from BOI                          , score 10 points
                                                          TABLE 3
                               NEW SUPPLIER EVALUATION FORM OF THE CASE COMPANY
                             Supplier Evaluation Form                                                                                              Silicon Craft Technology
Supplier name :                        Supplier address :                                                                              Since ...............................
…………...………………………………….…………...….         ………..………...…….…..………..…………………………………                                                             to.................................
Product name :                         Supplier website :                                                                              Tel ................................... Fax
…...……..…………….………………………………..……         ………..………...………..…………..…………………………                                                                ……………….…...
                                                           .
                                                                                                                                                       Full
                                                                 Key Factor for                                                                                 Supplie         Related
Item        Main criteria            Sub Criteria                                                        Scoring Principles                            Scor
                                                                 Determination                                                                                  r score          note
                                                                                                                                                         e
                             1.1   Physical form            Calculated from Cpk                                  -                                      10
 1     Product quality
                             1.2   Performance              Read distance              ≥5% = 7, ≥10% = 8, ≥15% = 9, ≥20% = 10                           10
       Product Cost &        2.1   Product cost             Compare to market price   at market price = 5, ≤5% = 7, ≤10% = 8, ≤15% = 9,                 10
 2                                                                                    ≤20% == 5, India = 7, China/Japan = 8, domestic = 10
       Transportation Cost   2.2   Transportation cost      Supplier country          Europe 10                                                         10
                                                                                      within 4 days = 5, within 3 days = 6, within 2 days = 7,
                             3.1 Response time              Speed of response time                                                                      10
                                                                                      within 1 day = 8, within 2 hours = 10
                                                                                      4 times inquiries = 2, 3 times inquiries = 4,
                                                            Completeness of
                             3.2 Complete information                                 2 times inquiries = 6, 1 time inquiries = 8, no more              10
                                                            information
 3     Supplier location                                                              inquiry = 10
                                                                                      Investigation not allowed = 5, foreign country = 7,
                             3.3 Convenience for audit      Distance to supplier                                                                        10
                                                                                      up-country = 8.5, Bangkok & perimeter = 10
                              3.4 Accessibility for setup                             Inaccessible to set up line = 5, accessible to set up line =
                                                                        -                                                                               10
                             line                                                     10
                             4.1 Daily production report                -             without report = 5, with report = 10                              10
                             4.2 Daily inventory report                 -             without report = 5, with report = 10                              10
 4     Supplier service                                                               30 days delayed = 5, 15 days delayed = 6, 7 days
                             4.3 Delivery on time           Delayed delivery time     delayed = 7, 3 days delayed = 8, 1 day delayed = 9, no            10
                                                                                      delay = 10
                             5.1 Correspondence with        Correspondence between    Need to adjust specifications = 8, Close to specifications
 5     Supplier technology                                  technology with                                                                             10
                                 specifications                                       = 9, Correspond with specifications = 10
                                                            specification
                                                                                      covering some processes = 7, covering all processes =
                             5.2 Covering all process       Covering of technology                                                                      10
                                                                                      10
                             5.3 Technology advance                     -             normal = 6, more advance = 8, most advance = 10                   10
                           5.4 Raw material grade     Supplier country          China = 6, India = 7, Thai = 8, Japan = 9, Europe = 10   10
                           6.1 Capacity has to meet    % of customer demand     50% = 5, 60% = 6, 70% = 7, 80% = 8, 90% = 9,
                               customer demand on     which capacity meets on                                                            10
6   Production capacity                                                         100% = 10
                          time                        time
                           6.2 Capacity flexibility   Need demand forecast      need 2-3 months forecast = 5, need no forecast = 10      10
    Board of Investment
7                                      -                         -              with BOI privilege = 5, without BOI privilege = 10       10
    (BOI)

								
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