Your company's ability to promptly respond to your customers' needs hinges in great part upon your suppliers' efficiency. While price should always be a key consideration when evaluating suppliers, there are other factors that also should be considered. Below are five supplier evaluation best practices to help ensure that you select a capable, top-notch supplier.

1) Assess the supplier's resources and scalability. A supplier should have the manpower, tools, and facilities to support your company's continued growth. Additionally, the suppliers you choose should be able to handle large orders or requests without significant delays.

2) Visit the supplier's operations. A live visit to a supplier's headquarters can be an eye-opening experience. Ideally, you should choose suppliers with clean, well-illuminated, organized facilities. Equipment should be well maintained and employees should demonstrate keen attention to safety protocol. 

3) Ask suppliers to outline their quality control procedures. Quality control procedures are vital to ensuring that products undergo a thorough inspection prior to dispatch. A good way to assess a supplier's commitment to quality control procedures is to find out if the supplier conducts internal audits on a regular basis.

4) Request references. A robust collection of glowing references from legitimate clients is a great indicator of a supplier's ability to meet your needs. Make sure that you contact each reference provided and ask whether the supplier was able to deliver products in accordance with cited promise dates.

5) Verify the supplier's certifications and accreditations. Industry certifications indicate that a supplier demonstrates a commitment to continued quality improvement and consistency in operations. Ideally, suppliers should possess ISO 9001 certification and Accredited Company Training Schemes (ACTS).

We invite you to contact us to learn more about our supply chain management solutions. We can help you separate the most accomplished suppliers from those that may not have the resources to promptly respond to your needs. We look forward to helping you expand your supplier network!

Managing critical suppliers allows you to evaluate your most important sources of products and services. Depending on the size of your company and number of suppliers, you will use either a standard classification or a more complex system. The first step is to classify all of your suppliers based on their weight in your production process. You can place suppliers in one of four categories based on their performance and role. These categories include:

• Incapable Partner: This category may also be referred to as a Basic Partner. They do not meet quality standards. Their information sharing is limited. Their products or services are needed, but you should strongly consider dropping the contract at the end of its term.
• High Risk Partner:  Your relationship to this partner may impact operational efficiency. There is limited benefit in extending your contract with this supplier. The cost and quality are below ideal.
• Associate Partner: Also known as a Preferred Supplier. They demonstrate a commitment to improvement, openly share information and have valued expertise. They should be willing to work toward becoming a full or critical supplier.
• Full Partner: These partners can also be referred to as Strategic Suppliers. They are your most critical suppliers. Your partnership will offer a unique advantage. They will be willing to assist with market changes and demands. You will have direct communication. They will always demonstrate high quality, on-time delivery, superior service and flexibility. They will have well documented controls. They will provide full support quickly, and are available anytime for questions.

Evaluation of suppliers should be conducted on a yearly basis, at a minimum. You should thoroughly document evaluation criteria including:  Price, Performance, Service, Reliability, Quality performance, Risk potential and Complaint information.

Key criteria in choosing critical suppliers relationships include:

• Specifications, standards and supplier response
• Volumes and pricing
• Change control
• Innovation potential
• Production part approval
• Traceability
• Competency
• Supplier process monitoring and self-audit
• Non-conformance management

The weight of each criterion may vary depending on the product or service. For example, is it more important for the supplier to provide high quality or low price? Is innovation potential more important than process monitoring? Points should be given for each criterion. Once this process in complete you will have a clear overview of your production chain and suppliers.  You can then share your evaluation with the suppliers and identify areas where improvements can be made. In addition, the results can be used  to strengthen the most important relationships.

An effective supplier relationship management system,  will provide digital documentation of all  suppliers, data, documentation and evaluations in one place. This is especially useful when working with a large number of suppliers. The system should be standardized and allow for easy  access and evaluation.

Critical suppliers are the most important piece of the supply chain. You rely on them for the most crucial parts and services. You must maintain a strong relationship with these suppliers and maintain open communication. In today’s global marketplace competitors can spring up at a moment's notice, challenging product quality and prices. You likely buy components, ingredients and services from all over the world to source quality at the best price. Control of your supply chain allows you to protect your business. Clear documentation, scheduled re-evaluation and the support of managers are necessary for successful supplier management, which will give you a tangible competitive advantage.

For more information on how Accupoint can help you with critical supplier management, contact us today.

Securing materials and equipment is the first step in the supply chain. A company's competitiveness is directly influenced by the performance of suppliers. A supplier that does not perform well can add costs, cause serious delays and can damage your company's reputation. It is imperative to have a system to evaluate your suppliers. It will help you determine potential problems like low standards of quality, poor communication, and substandard resources. Every company needs to have a supplier evaluation model in place to measure a supplier's ability to comply with their contractual obligations.

Supplier evaluation will identify their strengths and weaknesses. Several criteria should be considered including quality, delivery, service, and flexibility. Generally, the most important factor is quality followed by delivery, service and then flexibility. An effective means of evaluating suppliers is assigning them to one of four categories based on performance: full partner, associate partner, high risk and incapable. A full partner meets or exceeds all expectations. An associate partner needs some work, but performs well overall. A high risk supplier must be carefully evaluated. They can be used for the production currently underway, but future contracts require consideration. An incapable supplier will be dropped as soon as possible as they cannot properly fulfill their obligations.

Full Partner
A full partner must be compatible with you company’s current and future business plan. They will always demonstrate high quality, on-time delivery, superior service and flexibility. The supplier participates in your automatic ordering system. They will provide full support quickly, and be available anytime for questions. A full partner should also assist with new designs and provide samples within one to two weeks. They will demonstrate an ability to develop new processes and be committed to research and development. They will not ship out-of-spec parts, and have well documented quality controls. They will optimize lead times and allow order flexibility within reason. They will show commitment to cost reductions and share their cost structures and pricing models. 

Associate Partner
An associate partner will meet most of the criteria of a full partner. The associate partner should demonstrate a commitment to improving quality and delivery. You can work with them to develop action plans to meet your goals. The supplier must fulfill the needs of your company. They should be willing to work toward meeting the criteria to become a full partner.

High Risk Partner
A high risk partner is not compatible with the goals of your company. Their current quality and delivery are acceptable to maintain current production, but there is no benefit in expending the resources to bring them to associate or full partner status. The cost and quality are below your company’s acceptable standards.

Incapable Partner
Incapable suppliers do not meet quality standards. They do not demonstrate the capability of improving quality, delivery, service or flexibility. These suppliers must be dropped immediately.

Evaluating the performance of suppliers using an Analytical Hierarchy Process (AHP) model helps to determine the importance of each criterion and interpret the findings. You will determine what is most important for your company, and use that to rate your suppliers. Supplier can be measured based on the four main criteria: quality, delivery, service and flexibility. To determine the rest of the criterion you should consider whether the attributes are “soft” criteria (like supplier commitment or service) or “hard” quantifiable criteria (like the supplier's ability to fulfill orders). When thinking about cost, consider that the total cost of a product includes all the factors that go into getting your product to market in addition to its initial procurement cost.

For further information on how Accupoint can help your critical supplier management process, contact us today.

The API Spec Q2 standard has created some confusion regarding the implementation of certain requirements.  One frequent conundrum centers around the definition of a critical supplier, as well as the QMS requirements of said supplier.
 
The standard defines critical, in 3.1.6, as follows: That deemed by the organization or customer as indispensable or essential, needed for a stated purpose or task, and requiring specific action.
 
Let’s start with a simple definition of a critical supplier. The term “critical” and the criteria used in the designation should be determined by your organization and/or customer.  That being said, if a supplier is integral to the process or you cannot survive without them that would be a pretty good indicator that the supplier is “critical.” Keep in mind that “critical” can be defined in a variety of ways, so development of internal criteria is essential.
 
Next, let’s look at how to verify that your critical suppliers’ QMS conforms to your internal requirements. You may require your suppliers to have a third party certification in order to be approved.   In this case, you can outline the standard(s) required to satisfy your conditions. If you do not require certification, you should develop an audit checklist to verify that their QMS meets expectations.
 
The API Q2 standard requires the following, in section 5.6.1 Purchasing Control:
For critical services or service-related product, the criteria for the initial evaluation and selection of suppliers by the organization shall include the following prior to initiation of the purchase agreement:

1. Assessment of the supplier at supplier’s facility to meet the organization’s purchasing requirements, and
   
2. Verification that the supplier’s quality management system conforms to the quality system requirements specified for suppliers by the organization.
   

 
Remember, you’re only as good as your weakest link.  Q2 requires the management and monitoring of the supply chain.  Understand that this can create burdens and require additional resources to verify.   It is important that you develop a simple process to evaluate and monitor your vendors.
 
To find out about how Accupoint can help you streamline your supply chain management process, call us at 800.563.6250 or visit www.accupointsoftware.com