If you ever wondered why your rice is clumped together or potato sticks to the pan, it is because of starch, a common carbohydrate found in staple starchy foods such as rice, potatoes, wheat, maize, and cassava. For plants, starch is an efficient way of storing more energy in less space. In industrial applications, starch has a wide variety of uses ranging from use to stiffen the textiles, give strength and shape to paper, add taste to beverages and confectionary items, to its use in various consumer products. Starch manufacturers produce different kinds of starch such as maize starch, potato starch, and wheat starch, but cornstarch is the most common form. The procurement market intelligence report from SpendEdge states that corn starch accounted for nearly 57% of the global starch production capacity by raw material during 2016.
With multiple starch manufacturers and suppliers located across the world, it is essential to evaluate supplier performance and competencies to make decisions for future contracts. So how can buyers assess supplier performance in the global starch market?
Supplier Evaluation Criteria in Starch Market
#1- Service Resolution Rate
Suppliers ability to respond to buyer’s complaints in terms of quality of the starch, logistics issues, quantity, and packaging issues is a crucial indicator of the supplier performance. Ideally, buyers raise such complaints through complaint registration portal or email to which supplier should respond and ensure resolution within six weeks from the date the complaint was registered.
#2- Inventory Management Effectiveness
Buyers prefer to engage with suppliers who are reliable in terms of ability to provide effective inventory management. To assess supplier’s effectiveness in inventory management, the buyer can use metrics such as reduction in average lead time, which should be within a week for local suppliers, 15-20 days for regional suppliers, and within a month for global sourcing of starch. Additionally, buyers should also ensure that starch manufacturers have adequate safety stock inventory in case of unusual demands. Other things to look for is JIT adherence and use of automated inventory management systems.
#3- Efficient Plant Utilization Rate
Buyers can evaluate starch manufacturers based on their plant utilization rate; a higher percentage is indicative of lower variable costs. It signifies that the buyers can source starch from the suppliers at a lower rate. An ideal plant utilization rate in the starch industry is about 50%-60% of the total capacity.
#4- Lower Turn Around Time (TAT)
Apart from ensuring on-time delivery, starch suppliers should have a quick turnaround time (TAT) to respond to fluctuations in buyer’s demand without any degradation in starch quality. Buyers will ideally stick around with starch manufacturers that can fulfill buyers needs in terms of JIT delivery of starch. In the starch market, an ideal turnaround time is considered to be around 4-5 days from the date of requirement.
#5- Logistics Capabilities
The transportation of starch is not straightforward as it looks. Complications arise due to the difference in transportation laws across borders and complexity in packaging due to exposure to heat or moisture. To evaluate supplier’s logistics capabilities, buyers can assess the ratio of shipments damaged by shipments delivered.
Read more about the supplier assessment criteria for starch manufacturers along with pricing insights, sourcing strategy, key starch suppliers, procurement best practices and cost modeling in SpendEdge’s upcoming report on the global starch market.