Through the process of conducting daily business operations, one of the critical practices in an organization is supplier evaluation. This concept refers to the action of appraising and approving the current and potential suppliers through the use of quantitative assessment. The primary focus in this review is the quality of products and services provided. A firm will conduct supplier evaluation as a means of measuring and monitoring the performance of current supplier. The assessment will enable the company to make effective cost reduction, improvement of business operations and mitigating risks. The occurrence of low productivity trends is an evident indicator of lacking effective techniques of conducting a thorough appraisal. The following paper will identify the purpose of a supplier evaluation process, present an appropriate example and provide an implementation plan along with communication to supplier and identifying how data will be used for improvement of performance.
Purpose of a Supplier Evaluation
In any given business entity, supplier evaluation is an important factor in conducting daily operations that will lead to success. The first and foremost is mitigating risks associated with an ineffective supply chain. The organization is dependent on the supplier as the customer is dependent on the firm. This is true particularly in provision of high quality standards through its goods and services. The company will require its suppliers to provide high quality materials so as to guarantee its consumers receive products of high quality (Liou, Chuang, & Tzeng, 2014). Additionally, the services offered by the suppliers such as transportation and storage should be of high standards such that the materials are delivered in the best condition possible. Through this evaluation process, the organization ensures that suppliers employ high level of performance in their various tasks.
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The process of supplier appraisal is also essential in enabling the company to attain the ISO 9001 certification. According to the international standard, the organization should meet certain specific requirements within its quality management systems in an effort to guarantee they have the consistency to deliver products and services that meet the needs of the customer and regulatory requirements (Govindan, Rajendran, Sarkis, & Murugesan, 2015). Regulations in terms of quality provision focus on the internal practices of the suppliers to prevent environmental degradation and appropriate disposal of waste. By becoming ISO 9001:2008 certified, the company is assured of maintaining the customer satisfaction at the highest possible level. Furthermore, the certification also applies to the suppliers who should also meet the same standards in their numerous tasks.
Supplier evaluation process is an important practice in the general operations of the organization in making a choice between one supplier from another. Upon the end of a contract with a current supplier, the company takes close consideration of its performance during the entire period and develops an overall view of its practices. Creating a new contract will take into consideration the various deficiencies that have taken place and include them to ensure they are not repeated (Liou et al., 2014). The firm will reflect on these problems and develop methods that will help reduce the unnecessary costs incurred in future business-supplier relationships. This evaluation process also has the effect of improving these relationships where both parties involved in the contract are satisfied (Govindan et al., 2015).
Example of Template
Supplier Quality Contact
|Supplier Rating||Company Rating||Customers Rating|
|Quality||What are the skills of the workers in relation to company needs?|
|Does the supplier have the resources to fulfill clients needs?|
|Presentation of ISO 9001 certificate and other quality commitments of supplier|
|Price||What is the financial situation of the supplier|
|How much discount is offered?|
|Performance||How much control does the supplier have over its numerous processes?|
|Policies to ensure consistent production of quality goods and services|
|How important is quality and meeting deadlines in company practices?|
|Supplier commitment to environmental laws and best practices?|
|Supplier’s plans of ensuring communication with company.|
Once the organization has developed appropriate appraisal criteria of its suppliers, it is essential that a well developed plan for implementation is developed. The upper-level management will be responsible for setting up a team that will conduct the evaluation. Most likely the members will come from the supply chain department as they are well versed with the issues of procurement. The team will be responsible for collection of the data. However, the team will engage in cross-functional communication with the other departments as a means of ensuring all needs across the company are met (Govindan et al., 2015). The various issues taking place with the current suppliers will be addressed during this interaction. The team established will be responsible for acquiring data from the current and potential suppliers and internally from the employees. Furthermore, the various clients associated with the suppliers will be sought for comments on the evaluation of the company. This process will help develop a list of potential suppliers and those that are not meeting the required standards.
Supplier Communication Plan
As mentioned earlier, the evaluation process is a means of addressing issues in the supply chain. Therefore, it is essential that the supplier is informed on whether they are operating within the required standards of have failed completely. This communication process works well towards improving the relationship between the supplier and the company (Liou et al., 2014). It is done on a routine basis where for instance the supplier is required to receive certification from a recognized standard setting body. The change taking place requires a re-evaluation of the supplier company and the ways in which they conduct daily operations. The assessment team will keep close contact with the suppliers when any significant changes in terms of improvement are necessary. In light of this, the team should inform them of potential innovation plans for the products that they seek. The company uses this as a measure of increasing efficiency in growth and administration activities.
Supplier Performance Improvements
The data derived from the evaluation is vital towards the future relationship with the supplier. For instance, if the company employees point out that the delivery of products is usually late while the suppliers indicates contrary, tensions are bound to rise. It is important that the team of evaluators develop a method of keeping record of delivery and condition of products once received from suppliers. The company and its suppliers will both keep the record and identify cases of lateness or early deliveries (Govindan et al., 2015). This practice will ensure the organization have adequate reason for providing an appropriate plan of action for improving the operation. In this case, it may be to change routes, increase staff or improve the quality of transportation.
From the above report, it is evident that supplier evaluation is an important process in the daily operations of the company. The business will conduct this appraisal with the intent to improve performance of the supplier, make a choice between the current ones and potential suitors, increase quality to achieve ISO standards and reduce cost in the supply chain. The criteria for assessment should be well detailed to relate with the operations of the business and its needs. The upper-management then takes the role of developing a plan for implementation and acquisition of data from the appraisal. This information is used to make changes in the quality, cost or processes of the supply company significantly improving its performance.
Govindan, K., Rajendran, S., Sarkis, J., & Murugesan, P. (2015). Multi criteria decision making approaches for green supplier evaluation and selection: a literature review. Journal of Cleaner Production , 98, 66-83.
Liou, J. J., Chuang, Y. C., & Tzeng, G. H. (2014). A fuzzy integral-based model for supplier evaluation and improvement. Information Sciences , 266, 199-217.