Conducting a Supplier Evaluation? Focus on this

A stable supply chain is the basic element of every successful business. An effective evaluation of the suppliers brings about a close working relationship with your vendors, which will in return, enhance a streamlined production process, guaranteed quality products and you will minimize or eliminate supply chain hidden costs. Again it just comes down to the factors you considered when conduction a supplier evaluation.

Continuous evaluation brings about a reinforced relationship with suppliers. Most organizations regularly evaluate their vendor’ performance, in order to identify inefficiencies in their operations or exploit growth opportunities.

By assessing suppliers’ through various metrics or preset parameters, you can ensure that your vendors share your practices and priorities, and can then adjust their operations to your organizations’ competitive benefit. In the process, you can significantly improve your performance in terms of quality, delivery and pricing.

Conducting a Supplier Evaluation: What to Evaluate?

Conduction a supplier evaluation and assessment is largely based on data an organization has, to make an informed decision. A carefully structured process has to be put in place, preferably a model centered on quantifiable performance indicators such as production costs, delivery times and inventory levels.

A standard supplier assessment criterion provides the required frame of reference with which you can evaluate a vendors’ abilities and compare it with those of competitors.

Clear expectations have to be set before evaluating a current or potential supplier. From the beginning, you should clearly define your goals so that the vendor fully understands the obligations involved and can adjust to the expected performance levels if needed.

A number of factors can be used as a basis for conducting a supplier evaluation, some of these factors includes:

1. Financial Capacity

All supplier assessments should thoroughly appraise the vendor’s abilities and limitations. A vendor that cannot afford the necessary financial resources to scale production in response to your production cycles will not fare well in any review.

2. Quality

The quality of a product cannot be quantified but quality should always be at the core of a supplier evaluation process.

ISO BS/EN ISO 9001:2000 certification is the industry standard, it specifies requirements for quality management systems like the ability to consistently provide products that meet customer and applicable regulatory requirements.

3. Performance

The organization needs to assess the vendors ability to meet their task. Previous engagements, recent completed projects and current projects are some of the areas that need to be evaluated and remains a key element in the evaluation process.

4. Risk

Every business face risks or potential dangers, suppliers should operate to minimize such risks. Performance review metrics such as overall delays, response time can help you develop a reliable evaluation of the risks posed by a particular supplier.

5. Environmental Impact

Every organization is in the business of conserving the environment, your suppliers should as well be able to meet your organizations goals on environment. An assessment should cover a vendor’s waste management tactics, waste reduction practices and as well as efforts to achieve green manufacturing practices.

Suggested: Bid rigging in public procurement 

Conclusion

A well-structured supplier evaluation model can only be achieved if your organization is aware of the basic elements to consider in order to achieve the ultimate goal of the evaluation process.