Supplier management is the key to having an effective supply chain – one that is optimised and can be held accountable. Your suppliers sit at the heart of all of your organisation’s activities and processes and they also ensure that a company can run as it should. In order to do this effectively, though, you should take the time to ensure your suppliers are approved.
In Why Supplier Management should be central to your procurement thinking, Peter Smith stated “it is essential to ensure suppliers meet immediate needs and to enable performance and value improvement activities to be pursued through the course of the contractual relationship. That requires the right data of course – which must be relevant and usable.”
What can you do to achieve approved suppliers? We explain in three simple steps:
While this might seem like an obvious step, it’s often one that can be missed or rushed in the process of signing a new supplier. You must spend time and resource researching and gathering information on a potential supplier.
Information is needed to establish whether or not a supplier has the capability to carry out the service that they are proposing, or to deliver their product to the standards that are required of the client.
This includes checking that the supplier:
- Does what the client needs
- Works in the right area geographically
- Or that their business is big enough to handle the contract they’re being considered for.
This information will be vital to ensuring that the job is carried out to your high standards.
Use a process and a system that provides this information to you and keeps it up-to-date. Why make work for yourself?
Introducing any new supplier to your supply chain will carry an element of risk that can be mitigated by following this verification step.
Taking the claims of a supplier on face value, shouldn’t be adhered to as the best practice. You should always work to verify that what they suggest their capabilities are, are facts. Failing to assess the supplier could leave you in a vulnerable position further down the line if a suppliers claims prove to be false.
While we suggest that this step is essential in approving your suppliers, in some cases when working in specific industries verifying information provided by a supplier is a legal requirement. Checks that are carried out on supplier information should always be evidence based and may involve verification with certification bodies or insurance companies.
Use a process and system that adapts to the supplier and what they do. After all a one size-fits-all process may not fit anyone.
Authorisation is the process of approving a supplier to deliver work for your company.
Once a supplier has demonstrated that they can provide the products or services that they claim to offer, your next step to share with the supplier and their employees, exactly the kind of work that they have been verified to carry out – in granular detail.
This part of the process will also include providing the supplier with any site access, permits or documentation that they will need in order to begin work on the job that they have been verified for.
Authorisation will ensure that you don’t find yourself in a situation where work is completed outside of a client’s verified scope, impacting on the reputation of your business and your supply chain.
Don’t let your good work go to waste by asking, or allowing, the supplier to do work outside of the scope you’ve checked them for.
Managing a supply chain can be a complex undertaking so it helps if you can confidently understand the best practices of supply chain compliance. This doesn’t have to be as daunting as it sounds.
From assessing supplier capability through to monitoring your KPI’s, our guide, the Introduction to Supply Chain Compliance Best Practice explains how you could use compliance management to improve your overall supplier performance and mitigate unnecessary risk.
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