PROFESSIONAL SERVICES
START SMELLING THE COFFEE!
The Siemens’ decision has been made. Those wishing to be part of the nascent Humber supply chain must avoid complacency and start ‘smelling the coffee’. Large multi-national businesses will only enter into supply agreements with those UK companies who pass robust Supplier Evaluation hurdles.
SUPPLIER EVALUATION (SE) SE is a continual process within large purchasing departments. The Chartered Institute of Purchasing & Supply tells us that Evaluation can take the form of a detailed questionnaire, an interview, a site visit, most likely all three. SE will include appraisals of various aspects of the supplier's capacity such as financial forecasts and history, quality assurance credentials and organisational structure.
SUPPLIER ADAPTABILITY SE is one of the fundamental steps to evaluate a supplier’s adaptability towards its new customer. There are various possible frameworks which can be set by an organisation for establishing supplier credentials and capabilities.
ISSUES ADDRESSED WILL INCLUDE… • Product quality level • On-time delivery and consequences as a result of non-performance
• Correct quantity • Service level • Price • Ability and willingness to meet changing needs
• Willingness to share sensitive information e.g. open book costing and to participate in new product development
And this is not an exhaustive list! REVIEW
A potential supplier should expect to have its medium term Profit & Loss and Cash flow Forecasts reviewed so that the customer can take comfort that it is entering into a relationship that will stay the distance.
BENCHMARKING
Prices and quality will be benchmarked against an existing global supply chain. The supplier should have to give assurances that its staff are competent, experienced, with relevant qualifications and that policies over staff development and retention are key constituents of its Business Plan and Board Agendas.
BUSINESS PLAN
The Business Plan should convince the SE process that driving cost out of the relationship to the benefit of the customer is a structured and regularly reviewed process.
It should detail its approach to issues such as Total Quality Management (TQM), Manufacturing Resource Planning (MRP) and critically give assurances over its relationships with its own supply chain. It is likely that there will be a formal definition of what ‘good’ looks like, what protocols are followed should problems occur during the relationship and who the key contacts from both parties are.
RISK REGISTER
The supplier’s Risk Register needs to give comfort to the SE process such that the customer can fully understand and build into its own risk profile potential pitfalls.
If your company is not in good enough shape to undertake a robust Supplier Evaluation process the time to act is now.
JAD Financial Management Services Ltd Click to view more info
www.windenergynetwork.co.uk
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