Supplier evaluation is one of the widely used term in quality inspection industry and refers to the process of approving and evaluating potential suppliers by quantitative assessment. The main purpose of supplier evaluation is to make sure a portfolio of optimum class suppliers is available for the use. It is also a process applied to present suppliers to monitor and measure their performance for the purposes of mitigating risk, reducing costs, and driving continuous improvement.
Types of Supplier Evaluation
- Supplier and Factory Audits
This audit ensure that your facilities can deliver optimum quality products, support continuous improvement and operate quite efficiently.
- Sustainability Audits (ISO 14001)
- Manufacturing Process Audits
- C-TPAT Security Audits
- Ethical/Social Responsibility Audits (SA8000)
- Customized Audits
- Quality Control
Quality control solutions resolve various problems like failing to provide the needed performance or quality.
- Supplier Development
- Supplier Verification Services
- Supplier Capability and Qualification
- CAPA (Corrective and Preventive Action) Management
- ISO Transition Services
Process of Supplier Evaluation
Supplier evaluation is a continuous process within the purchasing departments and forms part of pre-qualification step within purchasing process, although in many companies it includes the participation and input of other stakeholders and departments.
Most firms or experts experienced in collecting supplier evaluation information prefer doing so using the 5 step processes for evaluating which to approve. Their processes often take the form of either an interview or questionnaire, sometimes even a website visit, and includes appraisals of different aspects of the business of suppliers including financials, capacity, organizational structure, quality assurance, and processes and performance.
Based on all the information gathered via the evaluation, a supplier is carefully scored and either approved or disapproved as one from whom to procure the raw materials or services. In many product inspection companies, there is an ASL (approved supplier list) to which a well-qualified supplier is then carefully added. In case it is rejected, the supplier is not made available to the assessing procurement team of company. After approval, a supplier may be re-evaluated on a periodic, often annual basis. This process is defined as the “supplier performance management”.
Benefits and Drawbacks of Supplier Evaluation
There is a plethora of benefits linked with effective and proficient supplier evaluation process such as mitigation against poor supplier performance or performance failures. The benefits typically include sourcing from suppliers that provide high standards of product and service levels whilst offering business stability and sufficient capacity. Supplier evaluation can help both suppliers and customers identify and remove hidden cost drivers in the supply chain management. The process of performance evaluation can motivate the suppliers to improve their efficiency & performance.
There are several other challenges as per the to the supplier evaluation.
To mitigate this, big enterprises have a dedicated department which is known as procurement department performing cost-benefit analysis in order to evaluate if the company should engage the vendor or perform the task in-house. This type of department can take a considerable amount of resource, therefore, management’s support and commitment of a supplier evaluation process is crucial.