Supplier Evaluation
Do you think suppliers play an important role in a company’s operations, delivery, and production?
Without a doubt. This is why it is important to make the right decision and make sure the supplier you are choosing for the parts, components, or services you need will actually meet your expectations and needs. Otherwise, you will have to start all over and make sure that, this time, it is the right one for your requirements and needs.
Now, how can you know a supplier is good for your company and goals when you haven’t tried it before. We are not going to lie, part of it is luck and give your vote of faith when you hire or make a contract with one. However, there are different elements, aspects, and parts that can tell you if it is good or not.
This takes us to the main reason why people consider Supplier Evaluations: because they can determine all this with this process. A Supplier Evaluation consists of assessing and approving all the potential suppliers for a company or business by quantitative and qualitative assessment. This is conducted in order for companies to find a reliable and trustworthy supplier with a great portfolio of services and products to offer.
Or, at least, make sure that the supplier they are choosing to make a contract with can meet all the requirements and expectations. This is very similar to Supplier Audits, but the difference is that there are several methods to approach this evaluation. A supplier audit will take time and make the auditors work around the documentation and processes while Supplier Evaluation is to assess every detail and mostly, the performance of the supplier.
But what is the purpose behind this evaluation?
If the company is able to measure the current performance of its supplier, it will be able to reduce costs, mitigate risks or potential ones, and drive continuous improvement in the company. Such as boosting the performance, production, and efficiency of the company to produce final products, items, or provide certain services. After all, the performance depends on the supplier’s ability to fulfill its role and no company can improve when it depends on the person and company providing the parts and services.
How can you conduct a Supplier Evaluation?
Unlike audits and other evaluations, the truth is that this one in specific has different criteria according to the industry or sector it is evaluation. However, some of the criteria are quite general for suppliers of all industries since it is about meeting specific standards that every company—not only suppliers—must go according.
When you are going to conduct a Supplier Evaluation in a company or business dedicated to any industry, keep in mind these 4 key criteria:
QCD (Quality, Cost, and delivery).
When evaluating a construction company, making sure that the material quality, time of delivery, and the cost per unit or according to the contract is just right will be crucial. In some cases, a specific aspect of these three has more relevance than others.
For example, in the construction sector, you might want to put quality over delivery or cost sometimes. And the same can apply with other industries or materials and can be different from the cost or delivery depending on what you care about the most.
Long-Term Relationship.
Can you build a long relationship with the supplier?
If you can, this will save you a lot of time, effort, and money. After all, building relationships with potential and trustworthy suppliers is super important for any company in need of their materials and services.
But before making a quick decision, try to conduct a proper evaluation of this part. Otherwise, you might end up stuck in a contract that doesn’t suit you as much as you thought.
Financial Stability.
Is it stable?
We all know the type of rollercoaster companies and businesses can be, and this is not any different for suppliers. Imagine that tomorrow, your supplier calls you to tell you it can’t continue to provide you with the materials due to a financial issue or problem.
It will be the end of your business as well. Therefore, you need to study and evaluate the information and financial data of the supplier and determine if it is going in the right direction with its economy and won’t affect your company’s status.
Performance and philosophy.
How does it perform the production and operations in general? Does it meet your standards, expectations, and requirements?
If it doesn’t, you will have a hard time with this supplier sooner than later. You need to make sure of two things here: that it doesn’t lack in production and the performance is always improving, and if the philosophy meets yours or it is close to it. These two aspects are equally important if you are trying to find a long-term relationship as well and of course, a supplier that won’t disappoint.
How can you approach or conduct this evaluation?
Unlike audits of any sort, you have several options to conduct this evaluation in any supplier’s company. However, most companies in need of a Supplier Evaluation will choose the option of third-party standard certifications, which is the option you might be part of if you are a company or business trying to provide these evaluations. In this one, the customer hires a company or service that conducts an evaluation for him or her.
The final results of the evaluation should finish in the certification of the supplier in some standards or parameters according to what it offers or provides. This will give the customer all the security it needs to make the decision of hiring or not this supplier and not only for a one-time project but rather to build a long-term relationship. Now, this is usually a method or approach that takes more time than usual, after all, the person conducting the evaluation needs to go through several aspects and areas way deeper than other approaches.
Therefore, if you need to conduct one for you and your supplier—or someone else’s—you have other options. For example, questionnaires, scorecards, visiting the supplier’s company or working area, or evaluating with an entire team of auditors the entire company. The way or option you decide to go for is completely up to you—if the evaluation is for one of your suppliers—or up to the person requesting you to conduct it on his or her behalf.
Now, most of the time, companies and people that want to carry out a Supplier Evaluation is because they are about to do it themselves. There are situations when some people go to a business or company and request this service and evaluation. But the most viable and cost-effective option is to conduct it yourself.
If this is your situation, you will have to go through several standards and requirements. If you ask us what we think about conducting your evaluations on your suppliers, we will actually encourage you to do it. But just make sure you are keeping your ISO needs for Supplier Evaluations in check.
Otherwise, making this evaluation won’t be simple and you won’t get the results or information you want and need either. Therefore, what does it take to be able to conduct it? Following ISO 9001 also applies here. This standard is known for being focused on internal and external audits, and although this one doesn’t have the word “audit” anywhere, it applies and qualified for this standard.
This means that in ISO 9001:2015—which is the latest version—you will find all the guidelines and requirements for you to meet. Other standards depending on the supplier you are evaluating also apply so you can have an idea of the aspects and elements you have to consider and how the management systems of these businesses work. For example, if you are interested in a supplier that can provide aerospace parts and components, you must be familiar with the quality standards in this industry.
Here is where the difficult part of the evaluation process and being a company able to conduct it, start: you need to keep up with all the ISO standards. And let’s not forget about the requirements and documentation that apply to this certification.
Conducting Supplier Evaluations isn’t simple when you think about everything you have to assess based on some standards and needs. Most people would define this evaluation as selecting suppliers for your company based on their abilities and capabilities of meeting every requirement and need.
However, there is more to it than just that.
After all, Supplier Evaluation can be conducted in two situations:
- While having a contract with the supplier.
- When considering to hire or employ one.
Answering questions such as: “Can it meet my requirements?”, “Will all my needs be covered with this supplier”, is important.
But what about the other questions? Those that start with, “Can you trust the supplier?”, “Will it go to bankruptcy at any moment?”.
They are crucial as well.
Will this process take long?
It depends on the supplier and your ability to conduct it correctly. To be honest, there is no estimated time for the evaluations you will have to conduct. Some could be done within a couple of days while others could take weeks.
Of course, the faster, the better, but you can’t determine this since an evaluation requires time and enough analysis to not miss any information. That being said, what are you trying to achieve with it?
The main objective of conducting these evaluations is indeed to find potential suppliers and create the best portfolio for your company in order to have qualified and reliable suppliers available all the time. But is there something behind your need of evaluating them?
Are you trying to find some information or elements that are relevant to your company’s performance and production? These questions can be answered for you only but we assure you that it won’t be difficult to find the answers once you grow familiar with the entire process.
Now, what do you need to know about Supplier Evaluation? What does it take to conduct them? Besides being aware of all the ISO standards and requirements you have to follow and meet, keep in mind that you also need to get certified. For this, our company ISO Pros is available to provide you with different services that include:
- Consulting.
- Support.
- Assistance.
- Certification.
- Auditing.
And many others are depending on your specific ISO needs and Supplier Evaluation requirements. To access our services and options, just make sure to contact us and let our experts and qualified auditors know everything you have in mind and what you need.
We will make sure to assist you in every aspect and allow your company to conduct Supplier Evaluation without problems.