Supplier Management
Supplier & vendor management is a fundamental part of a company’s governance and directly impacts the company’s performance, quality, and environmental responsibility.
Effective supplier management helps to ensure quality and environmental performance, maintain good business relationships, and build trust between companies and their suppliers.
ISO 9001 requires control of external providers that affect product and service conformity. ISO 14001 focuses on outsourced processes, procurement, life cycle perspective, and communicating relevant environmental requirements to suppliers.
Supplier management covers deliveries, risks, value creation, and the company’s strategic goals.
By conducting risk assessments, creating clear evaluation criteria, integrating environmental requirements into the procurement process, maintaining good communication, and documenting and following up on supplier performance, you can build strong relationships with your suppliers.
Here is how you can do it:
- Create a straightforward process for evaluating and selecting suppliers based on risk assessment, considering how they may affect your business regarding quality and the external environment.
- Establish criteria for monitoring supplier performance and follow up through surveys and site visits
- Work with suppliers to achieve continuous improvement and encourage certification to relevant standards such as ISO 9001 and ISO 14001.
- Document and follow up on supplier assessments and supplier performance regularly.
Start by identifying the suppliers that are most critical to your business. Think about suppliers of raw materials, services, equipment, and other vital resources.
Then, assess each vendor’s risk. This may include factors such as their ability to meet your needs, their geographical location, their financial stability, and their possible impact on the external environment (i.e., everything around us, including nature and built-up areas).
Create a list of criteria to assess each vendor’s performance.
Examples of criteria can be:
- The quality of the products or services they deliver
- How quickly and efficiently they can deliver
- How well do they handle any issues or complaints
- Their ability to understand and meet your specific needs and requirements
- Their environmental performance, including energy efficiency, waste management, and the use of renewable resources
When doing business with suppliers, you should always include environmental requirements in your procurement processes. This could mean requiring them to adhere to specific environmental standards, such as ISO 14001, or reducing their energy consumption and carbon emissions.
Integrate climate and environmental requirements into procurement processes and work with suppliers to reduce energy consumption and carbon emissions.
Supplier monitoring is a critical part of effective supplier management. It allows you to follow up and evaluate suppliers’ performance, which in turn helps ensure that they meet your requirements for quality, timelines, and environmental considerations.
To monitor your suppliers effectively, you can use the following methods:
- Regular audits
Establish a timetable that reflects the importance of each vendor. Use a standardized checklist to evaluate the supplier’s performance against agreed quality criteria such as delivery times and quality controls. The results are then discussed with the supplier to identify areas for improvement and ensure continuous development.
- Supplier reports
Request regular submissions of reports from suppliers highlighting key performance metrics, such as production volumes and environmental impact. This will become a tool to measure the supplier’s actual performance and provide immediate feedback for areas that require improvement.
- Site visits
Conduct regular visits to your suppliers to see their operations in action. This gives you first-hand experience of how well they manage production and allows you to identify any issues or inefficiencies.
- Supplier surveys
Send surveys to your suppliers for their views on how effectively the collaboration works. This will give you further insight into their business and offer an opportunity to identify any areas that could be improved.
- Customer feedback
Customer feedback can provide invaluable information about the supplier’s performance. If customers regularly complain about the quality of the products or services being delivered, it’s a sign that you may need to review your supplier relationships.
By regularly monitoring your suppliers’ performance, you can ensure that they meet your expectations and requirements. Monitoring suppliers also means acting on the insights you gain. If a supplier is not performing as expected, it is important to address the issue with them and work together to find a solution. If the problems persist after measures have been taken, it may be necessary to consider changing suppliers.
Keep open and regular communication with your suppliers. This helps to build strong relationships, encourages continuous improvement, and ensures that any issues can be resolved quickly and efficiently.
Documentation and follow-up make supplier management easier to control. They help to ensure that the expectations and requirements of all parties are met and that any issues or shortcomings are addressed promptly and efficiently. Here are some ways that you can use documentation and follow-up in your supplier management:
- Supplier agreement
These should document all critical aspects of your relationship with the supplier, including specific requirements for products or services, delivery times, pricing information, payment terms, and any environmental requirements.
- Performance reports
By regularly documenting a supplier’s performance, you can monitor it over time, identify trends or patterns, and act quickly if performance starts to drop.
- Meeting notes
Document all meetings with your suppliers, including what was discussed, what actions were decided, and what questions or issues arose.
- Follow-up actions
If there are any issues or shortcomings in a vendor’s performance, you should follow them regularly until the issue is resolved. Document these actions to track progress and ensure no information is lost.
- Supplier changes
If you decide to switch suppliers, you should document the entire process, including the reasons for the switch, the selection process for the new provider, and any steps to ensure a smooth transition.