As per my first post, i will be doing sharing of my knowledge on procurement in this blog as well as reviewing suppliers which i have done business with throughout my career. Perhaps this could helps those sourcing for alternative supplier, giving them an alternative solution.
Each company has it own criteria in evaluating its Suppliers while for me, I will be using 4 criteria in my Supplier Evaluation. I will also be adding weightage (in %) to individual criteria depending on what i would focus more on. And in each criteria, you can further breakdown into detail on what you want measure on the Suppliers.
1. Cost - 20%
2. Supplier Capability -25%
3. Communication -20%
4. Quality -35%
1. Cost - 25%
Cost is one of the key criteria every companies will input in their evaluation. No doubt our job as Procurement Professional is to ensure the company get a good deal, cost is not much a key factor in the overall assessment. We may not selected Supplier who quoted the lowest.
2. Supplier Capability - 25%
We need to assess whether Supplier is capable to fulfill our order requirement i.e. do they still need to outsource to 3rd party, Where is their main operation, What kind of risk would we be exposing to etc, Experience in our requirement etc.
3. Communication - 20%
we need to ensure to have a proper channel for communication between the Buyer and Supplier in an event an issue arise. We do not want to be waiting to get a response and thus, affecting the company's operation. So we would usually measure on: local / global account management, responsivesness etc.
4. Quality - 35%
And lastly, QUALITY. For me, i planned a heavy weightage on the quality of the goods. I do not want to buy cheap stuff but quality is bad hence incurring additional cost which in turn may be even more (i.e. Re purchase or materials, plant shutdown, customer satisfaction level drop) when you in the first place, buy with the better quality suppliers.
After giving all the scoring to each category, tally it up and use the below chart to rate the supplier overall performance
After which, i would usually send a memo with the grading to my supplier to let them know of the evaluation we had done and how they perform. As mentioned, this review is improve our working relationship with the supplier, not a tools to eliminate them unless no choice. Usually my supplier take it positively and work with me very closely to ensure their scoring improve for the next evaluation.
So above is what i will be using to evaluate my Suppliers, how do you guys evaluated yours Suppliers? Do check out my bi-weekly supplier review ( i hope to do it bi-weekly) and hope it can help you and your company in turn of cost saving.
2. Supplier Capability -25%
3. Communication -20%
4. Quality -35%
1. Cost - 25%
Cost is one of the key criteria every companies will input in their evaluation. No doubt our job as Procurement Professional is to ensure the company get a good deal, cost is not much a key factor in the overall assessment. We may not selected Supplier who quoted the lowest.
2. Supplier Capability - 25%
We need to assess whether Supplier is capable to fulfill our order requirement i.e. do they still need to outsource to 3rd party, Where is their main operation, What kind of risk would we be exposing to etc, Experience in our requirement etc.
3. Communication - 20%
we need to ensure to have a proper channel for communication between the Buyer and Supplier in an event an issue arise. We do not want to be waiting to get a response and thus, affecting the company's operation. So we would usually measure on: local / global account management, responsivesness etc.
4. Quality - 35%
And lastly, QUALITY. For me, i planned a heavy weightage on the quality of the goods. I do not want to buy cheap stuff but quality is bad hence incurring additional cost which in turn may be even more (i.e. Re purchase or materials, plant shutdown, customer satisfaction level drop) when you in the first place, buy with the better quality suppliers.
After giving all the scoring to each category, tally it up and use the below chart to rate the supplier overall performance
After which, i would usually send a memo with the grading to my supplier to let them know of the evaluation we had done and how they perform. As mentioned, this review is improve our working relationship with the supplier, not a tools to eliminate them unless no choice. Usually my supplier take it positively and work with me very closely to ensure their scoring improve for the next evaluation.
So above is what i will be using to evaluate my Suppliers, how do you guys evaluated yours Suppliers? Do check out my bi-weekly supplier review ( i hope to do it bi-weekly) and hope it can help you and your company in turn of cost saving.
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