Over the past years, we have observed in a large number of companies a dislocation of the core competences within the production and supply chains. The number of parties involved in the production process is increasing both in-house and outside of a company structure. It means that more and more parts and products must be bought to external companies. But to keep a constant quality and price level from suppliers and producers, more and more companies focus on building a strategic and long term supplier collaboration.
Supplier selection criteria:
The starting point of any successful collaboration is the search and the selection of appropriate suppliers fitting to your requirement as a buying company. Depending on the delivered product, the requirements of the buying company can be more or less strict and demanding. To better know which criteria are important for your company, a requirements analysis is recommended. This study should go over the following points:
- How important and decisive is the product and/or the supplier for the production process?
- How high would be the cost and the budget for such a sector?
- Which requirements must be met by the product?
- Which requirements must be met by the supplier?
There are several methods to order your suppliers in groups and types. We have reviewed the most common form presenting the four main suppliers types in an infographic you can find on this post.
Generally, purchasing departments are in charge of the supplier selection. At first, companies need to find potential suppliers. While large companies can use their own suppliers data bank, smaller companies can use the following ressources to find a new supplier:
- Business directories
- Internet research
- trade fairs
- Chamber of Trade and Industry
- Recommendations from business partners
- Supplier self-assessment
An easy way for businesses to extend their suppliers network is through supplier self-assessments. It offers the opportunity to suppliers to pro-actively get in touch with a company (most of the time directly through their website). The supplier generally needs to answer a few questions about its product and its company. If the product meets the requirements of the company, they will contact the supplying firma to ask for an offer.
Supplier qualification until the supplier approval:
- Get an offer / compare prices: the first offer will not necessarly be the best one
Our tip: negociate a special price or special conditions for the first delivery
- Supplier evaluation: Request informations about the company (for exemple: location, contact partner, supplier related certifications, logistic) and about the product (ex: quality, price, certifications, conditions of paiement and delivery) in the supplier self-assessment
- Ask for references: Discuss with the supplier customers
- Visit of the company and the factory / Pre-audit: can especially make sense if large order and a long term collaboration is planned.
- Request a sample (optional): it can be useful to request a sample to internally let your quality department check the product to make sure the quality standards are met.
The supplier questionnary can generally be used as a selection tool as well as a first supplier evaluation medium. The information requested in the questionnary can vary from a product to another and from a supplier to another, depending on the importantce and the priority of the criteria. Once all criteria have been checked and a supplier has been selected, the supplier needs to send all requested informations such as quality certification or prices to get the final approval from the purchaising department and the quality management.
To make a business relationship last long, a regular supplier evaluation and consecutive follow-up is important and most of the time even necessary. Likewise, the most important suppliers must be evaluated for some certifications such as the ISO 9001. By starting early on to work together with your supplier on product quality, you will be able to steadily optimize your terms of supply.
You would like to learn more about efficient and long-term supplier management ? Request now an online demonstration to learn more about ecratum and how we can support you in collecting data from your suppliers, evaluating them and keeping your whole documentation up-to-date. Set a date for the demonstration on the following page: