Consideration of the right Vendor
While a definition of a good supplier which would be acceptable to everybody would be difficult to write, there are a number of attributes which might be regarded as desirable. The attributes of a good supplier would include a supplier who:
- Delivers on time
- Provides consistent quality
- Gives a good price
- Has a stable background
- Provides a good service back up
- Is responsible to the buyers needs
- Keeps promises
- Provides technical support
- Keeps the buyer informed on promises
Buyers and sellers should always seek a mutually beneficial long term relationship through which advantages will arise for both participants in the trading process.
Vendor (Supplier) Appraisal
Supplier appraisal may arise when a prospective vendor applies to be placed on the buyers approved list or in the course of negotiation when the buyer wishes to assure him/herself that a supplier can meet the requirements reliably. What to appraise is related to the requirements of the particular purchases. All appraisals should evaluate potential suppliers from nine perspectives as follows;
- Finance; seeks to establish the suppliers financial capability to meet buyers requirements
- Production capacity; to establish supplier’s capability of a productive unit to produce stems within a stated time period.
- Innovation and design; (where appropriate) to establish suppliers reputation for design and innovation, willingness to participate in collaborative projects and suppliers R&D and design staff. With regard to their qualifications and experience.
- Production facilities; this would depend on the purpose of the facility of which the supplier should have full range of facilities needed for the job.
- Human resources; no organization is better than the people who work for it. Qualifications and experience of suppliers staff, turn over, workers attitudes and so on should be ascertained.
- Quality; has the supplier met the quality approval criteria such as ISO 9000, KEBS among others.
- Performance; purchasers may establish suppliers likely performance through enquiring suppliers past and current customers.
- Environmental and ethical factors; ISO 140001 provides guidelines on environmental policies and where applicable, suppliers should be expected to have an environmental policy and procedures for implementation of the policy.
- Information Technology; More than a third of the buyers are currently using the internet to conduct transactions and such usage is likely to increase.
The appraisal may be done by means of a suitable questionnaire, supplemented where appropriate by a visit to the potential suppliers
Key Performance Indicators (KPIs) for the evaluation of suppliers are;
- Quality and process control
- Continuous improvement
- Customer relationships
- Lean manufacturing
- Application of Just in Time
- Evaluation can significantly improve supplier performance.
- Evaluation assist decisions making regarding when a supplier is retained or removed from approved list
- It assists in deciding with which suppliers a specific order should be placed.
- Evaluation provides suppliers with an incentive for continuous improvement.
- It can assist in decisions regarding how to distribute the spend among several suppliers.