Vendor compliance is a key factor in making sure your supply chain runs smoothly. To ensure that your suppliers are compliant, you need to have a clear strategy and framework in place that will ensure that they are clear about what is expected of them (and when). This will improve not only compliance but also the relationship between you and your suppliers. Here’s how you can approach the subject of supply chain compliance and manage the process effectively:
Suppliers need to be closely managed to ensure that they are always performing to the level that is expected from them and that they remain compliant. There are four key steps to management of supply chain compliance:
1 - Policies and rules
Most clients have strict rules and policies that relate to companies undertaking work for them, especially if that work will be taking place on their own site, for example, repairs and maintenance.
It is vital at the beginning of a relationship between a supplier and a client that these rules and policies are made clear so that further down the line there isn’t any confusion. A site induction is a good example of showcasing processes that are implemented on construction sites.
2 - Contracts and specifications
These documents should provide detailed information that describes what the purchaser is buying and exactly what the supplier should deliver. It is possible that this can extend the actual product or service, for example, warranties or certifications. The contract is not fulfilled until all these things are delivered and can be used as a monitoring tool to track progress on a particular project for the supplier, or client.
Specifications can also mean any industry or government standards that a supplier should have – these shouldn’t be taken at face value and should always be checked by a competent person, or a third party such as a certification body or an insurance company.
3 - Controls and restraints
This can form part of the contract document agreed by the client and the supplier. Where controls and/ or restraints will be imposed upon suppliers, they must be fully communicated, so as to avoid any unnecessary or unwanted work taking place.
An example of this is if a maintenance contractor arrived on site and discovered that the repair work required is more extensive than originally anticipated – suppliers would often undertake this extra work as they believe that is what they have been tasked to do, however in some circumstances you may not want them to carry out this work.
Other control processes could include site access restriction, making sure that only approved people are allowed to access your site.
Part of the management of a vendor is to monitor their performance throughout the process, from their behaviour to whether they are meeting the KPIs that were set out in their contract.
By monitoring vendors, it is easier to pick up on any areas that need improvement, and it can highlight any aspects that are open to risk which will allow you to plan for that scenario. All in all, monitoring will give you better visibility of your vendors and will help you in the future when you’re deciding which supplier best fits your needs.
What can you do next?
By following the steps laid out in this blog, you will be on the right track to maintaining vendor compliance, but there are other things that you can do too. Why not take a look at our supply chain health check here.