Jeremy Ferrer
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Optimize your C-Class purchases and boost your results.
January
In a company, suppliers, just like customers, play a crucial role. More and more organizations, with a mature procurement function, see them as real partners who can help them evolve. Indeed, optimizing company performance involves controlling the costs associated with purchases. As such, supplier evaluation is an essential process for businesses that want to optimize their costs, but not only that. Evaluate your suppliers is necessary, because it makes it possible to avoid a failure in the supply chain. In this article, discover the different supplier evaluation criteria as well as 20 points to analyze to evaluate a supplier offer.
Before you understand the reasons for proceeding withsupplier evaluation, let's first define this term. Do not confuse selection, quotation and supplier evaluation. Selection consists of choosing new suppliers. The rating is an assessment of suppliers taking into account certain criteria. Finally, supplier evaluation consists in the assessment of suppliers with whom a company already works.
Supplier evaluation is a key element in the supply chain in that it ensures that the selected providers meet the policies and supplier assessment procedures put in place. It also makes it possible to select suppliers who are able to meet the company's requirements in terms of quality, cost and time. The process effectively includes a phase of analyzing the willingness and ability of the supplier to meet the expectations of the institution, as well as a phase of understanding its financial health, organizational capacities and innovation.
The implementation of a methodology supplier evaluation is also a decision-making aid for the company. This allows him to determine who are the best rated suppliers and the most able to support him in achieving his goals. This avoids any form of subjectivity that can lead to sometimes misleading impressions when choosing suppliers with whom it should ally itself. Having a complete and objective view of a supplier's performance and risks is important for improving supply chain management and reducing costs.
Here are some benefits that can be derived from carrying out a supplier evaluation :
In a market where the number of competing suppliers is constantly growing, one of the major concerns of businesses is to find a provider who respects its commitments, who has expertise and experience in its field, who understands the needs and expectations of the company well, who is aware of the challenges of the contract and who does not seek to put its benefits before quality. It is therefore important to define in advance supplier evaluation criteria in order to ensure respect for all these values.
Relying solely on the financial aspect of the service is therefore not recommended when choosing or supplier evaluation. It is essential to consider other aspects that correspond to business and project goals and production constraints. These criteria include the quality/price ratio, delivery times, contract execution conditions, payment terms, references, etc.
There are several methods for Evaluate suppliers. We mainly remember two: the supplier evaluation questionnaire And the supplier scorecard.
The first approach is to use questionnaires as a tool for supplier evaluation. The questionnaire should contain relevant questions relating to the needs of the company and its sector of activity. Several types of questions can be asked, such as:
The second approach is to Evaluate suppliers through an inventory sheet. This document created by the company makes it possible to carry out an impartial verification of the quality of the services provided by the supplier. This method of supplier evaluation also makes it possible to improve the competitiveness of the service provider and to ensure that it meets the expectations of the company.
One supplier scorecard includes the following sections: general information about the supplier, its performance, strengths and weaknesses, and recommendations for improvement.
The realization of a supplier evaluation is important for a company in that it helps it develop effective strategies to choose the right suppliers and to reduce supplier risks. Supplier evaluation is a complex process that involves several steps:
As mentioned earlier, several methods of supplier evaluation exist. However, not all are created equal. The best approach is one that allows for a thorough analysis of suppliers by combining existing methods. One of the most used approaches is to combine objective and subjective sources.
Objective sources consist of financial data provided by the service provider, including financial statements, tax returns, bank documents, etc. Subjective sources, for their part, include information collected from personal interviews and exchanges with the supplier.
Who says supplier evaluation, called performance indicators. It is not possible to make a relevant and objective assessment of suppliers if measures are not established. But still, you have to choose the right performance indicators to use. The best KPIs are those that align with business strategies.
Most companies use indicators to assess supplier activity and analyze the cost of quality. In particular, the former measure results, while the latter assess inputs.
Now that suppliers are evaluated based on their performance and the quality of the relationship the company has with them, it is time to classify them.
The purpose of a supplier evaluation is to find the right partner with whom the company can maintain a successful business relationship. Indeed, it makes it possible to clarify the needs of the company so that partnerships can prosper and evolve in a transparent and effective environment.
The evaluation of suppliers allows the company to select the best suppliers able to meet its needs. Classifying them according to defined criteria makes it possible to set up a dashboard that makes it possible to choose the best service provider (s) for a project.
Just like the supplier evaluation, the evaluation of supplier offers also plays an important role in optimizing business performance. Indeed, a poor choice of offer can have a significant impact on the entire business of the company, and not only on the supply chain. The analysis of offers received by suppliers should therefore not be overlooked. It minimizes risks and optimizes costs.
The first approach to evaluating supplier proposals is to use selection criteria in order to sort out the most competitive offers. Defined during the drafting phase of the specifications, these criteria are of an elimination nature in order to facilitate decision-making. It is a kind of first filter that allows you to select only relevant offers. The offers that will have passed this first selection are those that more or less precisely meet the needs of the company. It is then up to the Purchasing team to perform a more precise and formal analysis for the final selection.
Here are the main criteria to use for supplier offer assessment :
The quality of the goods or the service that the provider is preparing to provide is crucial. Indeed, it can have a considerable impact on the production chain. A poor quality product or service will slow down or even stop production. On the other hand, a quality product will be used in a sustainable way. Although it is difficult to know the quality of a product or service that has not yet been rendered or provided, it is possible to estimate it through certifications, such as the ISO standard, which are highly sought after today. They can reflect the supplier's ability to respond optimally to business demands.
Price and terms of payment are another important criterion in evaluation of a supplier's offer. In a highly competitive environment where businesses seek to control their costs, we must remain attentive to this point.
However, you have to be careful, because the cheapest offer is not always the most interesting one. You have to watch out for offers that are too attractive. It is also necessary to analyze the general and payment conditions well, because they can hide unpleasant surprises.
Deadline is an essential criterion in choosing a supplier. The definition of deadlines makes it possible to align the purchasing process with the production schedule. In a context where suppliers are receiving more and more orders, delivery times must be well studied to reduce the risk of delays.
Another approach for evaluating the supplier offer is to use a excel supplier evaluation table. It defines all the criteria that will allow a prima facie to choose a supplier for a given purchase. This table objectively compares the offers received in order to select the best proposal.
Here is a list of 20 points to analyze to assess a supplier proposal:
Does the supplier:
1- sent his proposal on time?
2- confirmed its ability to comply with the specifications, or proposed acceptable specifications?
3- answered all the questions asked?
4- offered a rate based on the currency and the appropriate units of measurement?
5- refrained from charging additional fees?
6- confirmed its ability to supply the quantity requested?
7- confirmed its ability to deliver, or to perform a service, at the stipulated location (s)?
8- approved the stipulated payment terms, or proposed acceptable payment terms?
9- confirmed its ability to comply with the stipulated transport conditions, or proposed acceptable transport conditions?
10- confirmed its ability to comply with the stipulated delivery/service dates or production deadline, or offered
Acceptable delivery/service dates or production time?
11- confirmed its ability to comply with the stipulated warranty, or offered an acceptable guarantee?
12- refrained from opposing the terms of the contract?
13- provided financial statements?
14- provided a cost breakdown?
15- proposed value creation or cost reduction ideas?
16- complied with the requirements for the expiry date of the proposal?
17- provided the information needed to be incorporated into the purchasing system?
18- provided proof for all required certifications?
19- provided the required samples?
20- proved that he was able to take on additional work if he won the offer? If one of the answers turns out to be negative, then it is essential to carefully reconsider your position with respect to this supplier and to anticipate future risks from an operational point of view.
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