Supplier and provider assessment: How to do it?

Evaluation fournisseur

The internationalization and the opening of markets make the competition between companies of the same sector sometimes very rough. Indeed, supply is increased and prices drop. So where and how to gain in efficiency? From your suppliers and service providers!

Yes, because if you cannot increase your sales you can surely gain more purchase. An effective supplier or service provider will surely increase your profitability. On the other hand, even with well-established processes you will not be able to compensate for a problem from a raw material or a bad service.

Remember the Samsung advertising campaign launched in 2016 to promote the Galaxy Note S7 and its resistance to water, its sophisticated aesthetics etc. Clearly the presentation of a "luxury" product which implied perfect assembly process, quality controls at all stages of manufacture ...

But in January 2017, big problem, the recall of 3 million smartphones for a total bill amounting to nearly 4.9 billion euros because of batteries that caught fire. Batteries made...by Samsung suppliers. Once the problem is identified it is always possible to make a claim against the provider. But regaining the trust of its users remains difficult.

Moreover, one criterion can help win the trust of customers, and that’s the international standards. For once, no possible detour, the most known standard (ISO 9001) specifies the need to control and drive the purchase process.

Therefore, in order to ensure one’s certification and avoid nonconformities, it is necessary to know how to assess one’s suppliers and providers, but how?

Upstream Assessment: Is your supplier able to work with you?

The first assessment to be made, which can be called "Upstream Assessment", is to determine whether the supplier or provider is able to work with you. It is global and generally performed by the purchasing department with the help of the quality department.

As always, different criteria of quality and quantity of the supplier can be taken into account according to your needs:

Product or service that meets all your specifications
Acceptable prices
Quality certifications
Logistics capacities (delivery method, possible procurement quantity ...)
Adaptability to changes
Reputation in the sector
Their regulatory watch mode

The goal is to identify anything that could be problematic during a first order and more importantly to avoid any bad surprise. The company policy is a good indicator; do not analyse only the product quality, the quality management aspect shall be emphasized.

Let’s come back to the example of Samsung smartphones

The provider, surely identified, made a mistake. When setting the specifications, Samsung specified dimensions that had never been made before.

The problem is the supplier has bent the ends of the elements of the battery to make it fit in the dimensions. And that resulted in two electrodes touching each other, they heated up and the battery caught fire. (Source LesEchos).

This problem is hard to identify during a first assessment devoted solely to the product quality assessment upstream of production. Quality management assessment taking the R & D processes into account could have helped identify the problem.

This type of assessment can be done through a visit to the provider, as well as through a questionnaire. They are compatible, we can consider the establishment of a questionnaire followed by a visit if the answers obtained are meeting your expectations. In both cases, the goal is to identify yourself as a Intelligence Officer.

You need to be sensitive to any major changes in your industry so as to determine the adaptability of your provider.

During my last experience, I had the opportunity to carry out this type of questionnaire related to organic cereals purchase. At the very moment of its drafting, the regulations prohibited the use of a disinfectant widely used on organic products.

One month after the application of the text, our questionnaire presented the question "do you use this product in the disinfection of your products?" With a comment part. This is the typical example of a question that identifies the adaptability and research capacity of a provider's regulatory watch.

Current and downstream assessment: the importance of criteria

This assessment takes place during and after the delivery. We can talk about effective quality of the supplier or provider. In this case, it is very important to follow up with as many criteria as possible.

You can take into account:

The effective quality of the product or service
Respect of quantities
The punctuality of deliveries
The timeliness of responses in case of any modification / non-compliance of the order
Product recall management
Innovation capacity
Their position in your business strategy
Your position in their portfolio
The availability of information
The length of your relationship
The history of your relationship ...

With these different criteria it is obviously very useful to create a general score, allowing you to create indicators by provider and to have an overall visual of your purchasing process (crucial point for a certification).

To be noted so as to properly assess a supplier or service provider!

Do not assess all of your suppliers, only the strategic ones. The paper for printers supplier, for example, will not have any impact on the quality of your final product or service except ... if your company is a paper mill!
Remember that a summary of a vendor's assessment over a certain period of time can facilitate negotiating the prices down.
In order to centralize all the information about a supplier and create statistical indicators, use quality software to free you from Excel entries and automate the indicators.