ISCOM 361 (2 Papers, 900 words, 1100 words)

1100 words required………..

Effective Supplier Evaluations

ISCOM 361 - Purchasing and Procurement

Effective Supplier Evaluations

In today's highly competitive markets, supplier selection is a crucial component to our business survival. In the past months, we have had multiple issues with our suppliers. We have experienced an unfavorable trend in low productivity because of the supplier's lack of component availability, re-working of product, and increased inventory levels of nonconforming material. As a result, we have not been able to effectively measure supplier performance due to a lack of knowledge of the different metrics, and which ones will implement positive changes in our supply chain process. Our company is currently working on an expansion project and working to become ISO9001 certified, part of this certification requires supplier evaluation. As we have researched Supplier Evaluation, we are recommending implementing this process immediately. In this presentation, will discuss the purpose of this process, provide a template for approval, discuss the implementation plan, communicating the new process to our suppliers, and how this data will drive performance improvements.

Purpose of a Supplier Evaluation Process

Supplier selection is a key component in our business operations. The products and services we receive, ultimately determine our customer's satisfaction. As we have previously discussed, we have been experiencing multiple issues with our current vendors, some of which could have been avoided if we had evaluated our suppliers. "The way we approach supplier evaluation may turn out to be the difference between a short, difficult arrangement and a long-lasting, productive business relationship" (Balle, 2018). When we select suppliers and make business purchases, our goal is to get the best products for the right price. The purpose of a Supplier Evaluation Process is to ensure the vendors are complying with our requirements develop a system of reporting that “demands suppliers conduct business fairly, honestly, safely and in adherence to local, state and federal laws. By establishing these requirements, we set expectations for performance. Key performance areas may include assurance of supply, responsiveness, support costs and product or service quality” (Duggan, 2018).

Evaluation Criteria, Implementation, and Template

As we work to obtain our ISO9001 certification, we are required “to document the following:

· Quality Manual

· Quality Policy

· Quality Objectives

· Quality Records

· Six Procedures

1. Control of Documents (4.2.3)

2. Control of Records (4.2.4)

3. Internal Audit (8.2.2)

4. Control of Nonconforming Product (8.3)

5. Corrective Action (8.5.2)

6. Preventive Action (8.5.3)”

By implementing these standards, it will help our company to meet our customers’ requirements for their product/service while fulfilling any regulatory requirements ("9000 Store", 2018). As we researched other company’s supplier evaluation, we structured our assessment to include the following criteria:

(1) Timeliness, (2) Product Quality, (3) Price, (4) Terms and Conditions (5) Credit Rating (6) Support Tech & Sales, (7) Customer Support, (8) Reputation, (9) Compliance, and (10) Overall performance. We are recommending the use of the following template:

VENDOR EVALUATION FORM

DATE:	TIME:
EMPLOYEE NAME:	EMPLOYEE TITLE:

VENDOR INFORMATION

COMPANY NAME:	PHONE: FAX:
COMPANY STREET ADDRESS:	CITY: STATE:
COMPANY CONTACT:	DELIVERY DRIVER:

	VENDOR EVALUATION	1	2	3	4	5
Timeliness	Deliveries – On time
	Response Time
Product Quality	Reliability
	Conformance
	Durability
Price	Competitive
	Consistent
Terms and Conditions	Meets Overall Contract Requirement’s
	Meets Delivery Requirement’s
	Meets Price Requirement’s
Credit Rating	Company Score
	Financial Stability Review
Support	Experience Rating
	Sales – New Products Notification
	Technical Support
	Customer Support
	Customer Satisfaction
	Response Time
Reputation	Client References
	Reviews Status
Compliance	Compliances to Local Regulations
	Compliant with Facility Requirement’s
	Compliant with Safety Regulation’s
Overall Rating

EVALUATION FOLLOW UP

EVALUATOR NAME:	TITLE:
SIGNATURE:	DATE
VENDOR CONTACT REQUIRED: YES NO	VENDOR CONTACT DATE: TIME:
RESULTS:

Accompanies with this new process, when we contract with a vendor, these meetings will be face to face with the vendors. In this meeting, we will review our expectations, and provide the vendor with a welcome binder, including our “quality manual, quality policy, quality objectives, quality records and six procedures” ("9000 Store", 2018). Our goal in this process to set our expectations, and begin to build our vendor/client relationship.

Supplier Communication Plan

“A company that institutes supplier metrics also must provide performance feedback to its suppliers. Feedback must come in the form of actionable feedback, for example sending an e-mail stating that a supplier had an 80 percent on-time performance metric does not engage the supplier to improve. This information is best given in a one-on-one environment, where an open dialogue exists. Sending a supplier, a spreadsheet report of his service via e-mail devalues the supplier and the company’s relationship with the supplier" (Hamlett, 2018). Our recommendation is to meet with our suppliers on a regular basis. This can be monthly, bi-monthly or even quarterly. The purpose is to discuss what is going right, and what areas need improvements. These meetings should be scheduled, organized and documentation should be provided for the vendors to references. In the event of major issues, that need immediate resolution, emails with pictures and documentation can prove valuable. It is key to remember that "the result of measuring supplier performance comes in the form of results or increased value gained from the supplier" (Hamlett, 2018). Open communication and a strong working relationship is the foundation of good supplier performance and continuous improvements. Our goal is to develop these relationships, through the common goal of customer satisfaction. As our business adapts, so must our vendors, this will ensure we meet our customer's needs.

Evaluation of Data and Supplier Performance Improvements

“Continuous improvement; speed to market; customer, employee, and supplier satisfaction; and global competitiveness require dedication to productivity and value-adding activities. These organizational goals drive management attitudes to quality, quantity, and delivery, with profound impact on the acquisition process. This is evident in supply management’s focus on inventory reduction and shortened lead times. (Johnson & Flynn, 2015, 200). When working with suppliers, there are going to be issued, and unforeseen occurrences. Our success is directly linked with that of our suppliers. It is how we evaluate the data and drive performance improvements that will make the difference. To reduce our company's risk, and to mitigate our damages we will be introducing a team whose focus will be receiving. This team will report directly to the Warehouse Chief Operations Manager, and can communicate the following to our suppliers when pushing for improvements:

· “Understand the needs of the business – Ensure our suppliers clearly understand, and can comply with the needs of our business. When improvements are required, communicate the what improvements are required.

· Define measurements - Identifying key performance indicators or other measurement indicators by which you judge supplier improvement, discuss the implementation of these measures with the vendor.

· Monitor the output - The measurement regime is in place and suppliers are on-board, our company must monitor the resultant flow of information. Whatever the agreed time-frame (either daily, weekly, monthly or quarterly) both the buyer and the business stakeholders must have visibility of all the relevant data-points. The buyer’s role is to ensure that these data are extant but also that they are disseminated to the relevant parties” (Webb, 2017).

In the event our performance goals are not met by the vendor, we then adjust course and proceed to vet other vendors based upon our criteria. Moving forward, we recommend this be the standard operating procedure with new, and existing vendors.

Conclusion

“Outstanding supplier performance requires extensive communication and cooperation between various representatives of the buying organization and the selling organization over a long period. Progressive thinking and planning is a further assurance of improved quality tomorrow” (Johnson & Flynn, 2015, 372). Our goal as a company is ultimately customer satisfaction, this requires procuring quality products, through reputable quality vendors. We are hoping that this proposal helps our company move past the supplier issues, and creates a process that will reduce the unacceptable risk product related issues.

References

9000 Store (2018). Retrieved from https://the9000store.com/iso-9000-tips-iso-9001-requirements/iso-9000-tips-documentation-requirements/

Balle, L. (2018). Chron - Approach in Supplier Evaluation. Retrieved from https://smallbusiness.chron.com/approach-supplier-evaluation-5164.html

Duggan, T. (2018). Chron - How to Manage Supplier Performance. Retrieved from https://smallbusiness.chron.com/manage-supplier-performance-43677.html

Hamlett, K. (2018). Chron - Supplier Performance Analysis. Retrieved from https://smallbusiness.chron.com/supplier-performance-analysis-3293.html

Johnson, P. F., & Flynn, A. E. (2015). Purchasing and Supply Management (15th ed.). Retrieved from https://phoenix.vitalsource.com

Webb, J. (2017). Forbes - How to Improve Supplier Performance: 4 Steps to Fix A Misfiring Supply Chain. Retrieved from https://www.forbes.com/sites/jwebb/2017/05/29/how-to-improve-supplier-performance-4-steps-to-fix-a-misfiring-supply-chain/#18ce30356111