Suppliers Asset Base – Appreciating or Depreciating?

Presents an approach for assessing the overall performance index (i.e. the relative value) of the suppliers asset base of an organization. Four sets of end‐result variables, for example the total service level (i.e. service level and its reliability), the total quality level (i.e. quality and reliability), the after‐sales service level and the effective price level have been considered to reflect a supplier′s performance. Appropriate surrogate measures for assessing these variables have been suggested. The performance level of a supplier has been judged in relation to the nature of the item, its importance, criticality, situational context in which the supply has been made and the proportional volume of the total requirements supplied by that supplier. This is expressed as an overall performance index for the supplier. A study has been carried out in a small‐scale engineering unit to assess the relative value of its suppliers asset base for a five‐year period relative to the base period. The suppliers asset base has been found to be appreciating over the years reflecting the effectiveness of managing it.