10 Simple Concepts That Everyone Can Use to Reduce Supply Chain Risk
Supplier evaluation checklist strategies vary from company to company. In most cases, they can be a proactive way to expand your organization’s ability to reduce supply chain risk as well as attract and maintain the right suppliers.
Establishing a company-wide methodology to help evaluate suppliers is easier than you think and will contribute to making sure that you avoid mistakes.
Mismatches between your expectations and those of your suppliers can cause delays, severe costs, and even damage your business reputation. Creating a simple and efficient supplier evaluation checklist is a reliable business control and can help you avoid many of these problems.
Obviously, you can never be sure you’ve made the right choice with a supplier, but at least, you can improve your chances of success by eliminating defining your evaluation criterion and implementation process.
Here are 10 simple concepts that you can add to your supply chain risk playbook.
The Supplier Evaluation Checklist
1. How Competent Is This Supplier?
This is the right question to ask, but ultimately will end up with both a subject and objective component.
Objective – Ask for credential and references.
Subjective – Keep running notes on all of your conversations with all of the members of the supplier’s team. Just before you are about to make the decision on that supplier read the notes and look at how those notes make you feel about that vendor.
Of course, your potential supplier will do their best to present themselves in the perfect way. There’s no such thing as a self-assessed competence level.- That’s your job.
2. What’s Happening With Your Supplier’s Capacity?
Capacity is just another word for resources. Make sure this new prospective supplier has, at their disposal, the resources needed to handle your tasks.
Can your supplier meet your specific demands? Well, that’s again up to you to decide because no supplier will say they are not up to the task.
3. Is Your Supplier Ready To Commit?
We aren’t talking only about a commitment to you as a customer, but also to the highest quality standards. If you’re planning a long-term business relationship, then an unreserved commitment is an absolute must.
4. Are You In Control?
This checklist concept has two dimensions.
Does the supplier react to your needs the way you want them to?
Does that supplier grant you access to their process audits, policies, procedures, and supply chain information? This last element is to ensure that your policies and procedures are aligned with the supplier and are being carried out.
5. Is Your Supplier Financially Stable?
Are you the supplier’s last resort or the next expected business step? Evaluating your supplier’s financial health can demystify his motivation for working with you. That’s why you have to be careful and thoughtful about financial stability. There are many different third parties that you can ask for help on this one. Think, D&B, Experian, Relx…
6. What’s The Final Cost?
There’s more than one cost associated with your potential supplier. You have to take into consideration all costs, especially the ones that sneak up on you if your provider isn’t ready to fully commit themselves and closely follow your procedures.
7. How Will the Supplier Ensure Quality & Consistency?
It’s simply not possible to expect perfect performance all the time with each delivery from all of your suppliers. However, each of your suppliers should be able to assure you that they will consistently adhere to top quality standards that will not be compromised.
This is why your supplier needs to share the results of their procedures and process audits.
8. What About Your Supplier’s Business Culture?
The most fruitful and long-lasting business relationships are built on a foundation of similar values and priorities. When it comes to your company culture, your potential supplier has to be a likely match. Aligned cultures and values are the best way to ensure a lasting relationship.
9. How About Your Supplier’s Awareness?
You need to check that your provider is fully aware when it comes to requirements associated with sustainability, best business practices, environmental laws, and other points relevant to your business.
10. How Are You Going To Communicate?
Finally, it all comes down to proper communication. You should consider the way you currently communicate with your highest performing suppliers. Document it, and then inform your new supplier of how you would like them to communicate. Make sure you outline the communication protocols for every day as well as the Who, What, and When of a Crisis.