Importers of consumer goods have always focused supplier selection on many attributes, but often too heavily on price alone. However, as consumers and industry have put a stronger emphasis on quality; evaluating, selecting and partnering the right supplier today has become much more critical and complex. Selecting the right supplier can help drive customer demand and build a strong brand reputation of quality products. Below are some steps to consider in an effective supplier selection process.
Identify a Supplier: Before selecting your supplier, it is important to gather the opinions of your stakeholders and define the criteria for the selection process.
This will identify the critical attributes of the order: cost, time, speed, as well as finished product quality & safety. You should also consider which country would best meet the criteria and then benchmark a few suppliers to assess their capabilities and compare pricing.
The ultimate goal is a win-win situation for the supplier and yourself; as such, open and transparent communication is critical
Key to success is value, cost alone is not the only criterion. In the supply chain industry this is often referred to as total cost of ownership, which looks at the supplier’s:
- Customer service
- Delivery commitments
- Reliability and responsiveness
- Resource savings (hard and soft)
Thanks to TrustSource Insights, you can identify risk ratings of different countries performance for your desired product with our risk radar that assesses millions of data points providing you with the necessary knowledge to make an informed selection.
Measure Supply Performance: A critical step of the supplier management process is developing an audit and assessment program.
It is always recommended to audit your chosen supplier(s) before a contract is signed to confirm that the supplier does not have any significant quality system failures that could affect your ability to produce top-quality products on time. You also need to understand the supplier’s strengths and weaknesses before the relationship becomes official.
Even after a contract is signed, you should continue auditing, basing the frequency of the audits on the criticality of the supplier. To determine the frequency, all suppliers should be categorized into a level of risk or importance. This prioritization will help you be smarter and more effective with your resources and place a higher focus on your important, high-risk suppliers, while continuing to monitor second-tier suppliers.
With an established audit program from Bureau Veritas, you can continuously monitor and assess each supplier’s performance tracking positive or sustained strong performances, as well as negative trends
Gain Supplier Feedback: Another tool that is often used is a self-assessment questionnaire
The supplier self-assessment can be used to identify performance gaps, as well as discover how the supplier understands their own operation. Examples of these questions to ask include rejected lots, perfect shipments and documentation errors.
Develop Partnerships: Ultimately, the supplier relationship is at its best when a strategic partnership is formed.
With a stronger business partnership, a supplier is more likely to:
- Anticipate what is needed and begin to take the leadership role in communication
- Notify if problems occur that limit production availability, or a quality issue is identified
- Communicate production delays when downtime or maintenance is required.
This type of partnership allows for an increased understanding and mutual benefits for both parties. It cultivates stronger commitments and encourages a greater interest in success for the finished goods. This type of relationship is the ultimate goal.
However, there are risks associated with forging this kind of partnership. Trust in both parties becomes paramount, and both entities must ensure no potential or real conflicts of interest occur. When both parties become more reliant on each other, if there is a breakdown on either side or the relationship dissolves, there is much more to lose.
Selecting the right supplier can help you meet the consumer demand for higher-quality products. When selecting the right supplier, you should remember to:
Include all key internal and external stakeholders in the process to agree on important criteria that the supplier should meet.
Assess performance through useful metrics and provide the necessary feedback to the supplier. </span>
Require strong communication between yourself and the supplier, poor communication almost guarantees a failed relationship.
Motivate your suppliers to develop strategic partnerships to ensure the greatest opportunity for success for both parties.
Perform audits for the selected supplier, and work with them to address any deficiencies. If the deficiencies are too great, move on to another supplier. Implement adequate monitoring to drive improvement in supplier performance.
Invest sufficient time, effort and energy early in the relationship to set up for success.