Supplier Evaluation Steps

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Supplier evaluation refers to assessment of existing or new suppliers on the basis of their delivery, prices, production capacity, quality of management, technical capabilities, and service.

Have you ever established a relationship with a supplier, only to realize, later, that you’ve made the wrong choice?

For example, you may have found a supplier that offered a good price, but later realized that its quality standards were low, or that its communication was unacceptably poor.

Mismatches between your needs and a supplier’s offerings can add costs, delivery delays, and even damage your organization’s reputation – for example, if the equipment or resources supplied are substandard.

The “10 Cs of Supplier Evaluation” help you avoid problems like these. This checklist helps you to set out your organization’s needs, understand how suppliers can meet them, and identify the right supplier for you.

1.Competency

First, look at how competent this supplier is. Make a thorough assessment of the supplier’s capabilities measured against your needs, but then also look at what other customers think. How happy are they with the supplier? Have they encountered any problems? And why have former customers changed supplier?

Look for customers whose needs and values are similar to yours, to ensure that the information you gather is relevant to your organization.

2.Capacity

The supplier needs to have enough capacity to handle your firm’s requirements. So, how quickly will it be able to respond to these, and to other market and supply fluctuations?

Look at all of the supplier’s resources, too. Does it have the resources to meet your needs, particularly when commitments to other clients are considered? (These resources include staff, equipment, storage, and available materials.)

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3.Commitment

Your supplier needs to provide evidence that it’s committed to high quality standards. Where appropriate, look for quality initiatives within the organization, such as ISO 9001 and Six Sigma  .

The supplier also needs to show that it is committed to you, as a customer, for the duration of the time that you expect to work together. (This is particularly important if you’re planning a long-term relationship with the supplier.)

You’ll need evidence of its ongoing commitment to delivering to your requirements, whatever the needs of its other customers.

4.Control

Query how much control this supplier has over its policies, processes, procedures, and supply chain.

How will it ensure that it delivers consistently and reliably, particularly if it relies on scarce resources, and particularly if these are controlled by another organization?

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5.Cash

Your supplier should be in good financial health. Cash-positive firms are in a much better position to weather the ups and downs of an uncertain economy.

So, does this supplier have plenty of cash at hand, or is it overextended financially? And what information can the supplier offer to demonstrate its ongoing financial strength?

6.Cost

Look at the cost of the product that this supplier provides. How does this compare with the other firms that you’re considering?

Most people consider cost to be a key factor when choosing a supplier. However, cost is in the middle of the 10 Cs list for a reason: other factors, such as a commitment to quality and financial health, can potentially affect your business much more than cost alone, particularly if you will be relying on the supplier on an ongoing basis.

7.Consistency

How will this supplier ensure that it consistently provides high quality goods or services?

No one can be perfect all of the time. However, the supplier should have processes or procedures in place to ensure consistency. Ask this supplier about its approach, and get a demonstration and a test product, if possible.

8.Culture

The best business relationships are based on closely matching workplace values  . This is why looking at the supplier’s business culture is important. For example, what if your organization’s most important value is quality, and your main supplier cares more about meeting deadlines? This mismatch could mean that it’s willing to cut corners in a way that could prove to be unacceptable to you.

9.Clean

This refers to this supplier’s commitment to sustainability, and its adherence to environmental laws and best practices. What is it doing to lighten its environmental footprint? Ask to see evidence of any green accolades or credentials that it’s earned.

Also, does this supplier treat its people – and the people around it – well; and does it have a reputation for doing business ethically?

10.Communication

Query how the supplier plans to keep in touch with you. Will its proposed communication approaches align with your preferred methods? And who will be your contact person at this firm?

It’s also important to find out how the supplier will handle communications in the event of a crisis. How quickly will it notify you if there’s a supply disruption? How will that communication take place? And will you be able to reach senior people, if you need to?

Six Sigma methodology

DMAIC (define, measure, analyze, improve, control) is an approach to problem-solving defined as part of the Six Sigma management philosophy.

DMAIC, which is pronounced “de-may-ick,” is a tool for improving an existing process.

The steps can be summarized as follows:

Define: State the problem, specify the customer set, identify the goals, and outline the target process.

Measure: Decide what parameters need to be quantified, work out the best way to measure them, collect the necessary data, and carry out the measurements by experiment.

Analyze: Identify gaps between actual and goal performance, determine causes of those gaps, determine how process inputs affect outputs, and rank improvement opportunities.

Improve: Devise potential solutions, identify solutions that are easiest to implement, test hypothetical solutions, and implement actual improvements.

Control: Generate a detailed solution monitoring plan, observe implemented improvements for success, update plan records on a regular basis, and maintain a workable employee training routine.

Six Sigma methodologies, which were originally used in manufacturing to improve quality, are now used in many disciplines including project management, education and agile software development.