Supplier Assessment: How to Do it Effectively and Efficiently

By Sophie Luo, Insight Solutions

Supplier assessment can refer to the process before you select from a pool of suppliers, and/or the audit or evaluation process on your supplier when you think there’s room to improve. In this post, we mainly focus on the latter.

When it comes to supplier assessment, evaluation, audit, or appraisal, one of the most head-scratching problem would be how costly it would be: You have to gather the right resources who are capable to do the assessment effectively, make a schedule that works well for every party, gain the approval from your supplier, pinpoint the areas to be improved, and make sure the feedback is effective enough to reduce cost, lead time and drive supplier performance.

So much to think about!

Here are four tips for your reference. Starting with asking yourself the right question, and you’re marching on the right path.

Know your purposes

The major purpose of your supplier assessment is to improve the overall performance of your suppliers of course. But you need to break it down to smaller pieces. Ask yourself the following questions:

• How would you describe your relationship with the supplier?
• Do you want to develop your supplier so they can fulfill your needs and possibly future requirements, or just want to make sure that you’re making the sound decision to switch to a backup supplier?
• What are your critical requirements? Reduce lead time, cost, on-time delivery, supplier having required capabilities to get the job done, or others?
• What should be the critical problem to fix?  According to the 20/80 rule, fixing such a problem could contribute to up to 80% of other problems.

Gather the right team

After setting out your goals, the next step is to decide who should include in your team. For example, if you have concerns over the equipment capabilities, a quality manager should be a must to your team. The rule of thumb is, you need to have the professional persons who can get to the root cause of the problems.

It’s also important to make sure that your assessment team can work together, from the startup meeting, to submission of the assessment report. Supplier assessment should be a team work which requires investment from both your side and that from your supplier.

Establish the assessment criteria

The supplier assessment process generally includes the following aspects: business & finance situation, operational capabilities, supply chain management, R&D and engineering capabilities, quality management, manufacturing and CSR compliance.

You need to decide how important each of the aspect is, and appoint appropriate percentage points to them, so you can have a quantifiable system to tell you what needs to be improved.

Decide when to issue the red flag

It’s as important to praise your supplier’s good performance as to red flag them when you see unpleasant performance. It’s a crucial step, in that it demonstrates to your supplier who’s calling the shot here.

In some cases, issuing the red flag is far from enough to fix the problem. This is when you need to consider switching to a backup supplier. However though it could be, you need to make the right decision for the project to move on.

Bonus: the all-in-one solution

If you are not entirely sure if you need to get your supplier assessed, how to proceed with the assessment, what personnel you should include in your assessment team, or how you can make sure the assessment is effective, don’t worry, we have an all-in-one solution for you: the supplier assessment platform.

We develop the supplier assessment platform just so you don’t have to vex yourself by assessing your supplier when you have no or very little idea how to do it.

When you sign up for the supplier assessment service, we’d send a team of engineers to do the on-site assessment for you. And you’d be able to keep track of each step of the assessment via the supplier assessment platform.

When the evaluation process is done, you’ll receive a report telling you how well your supplier is doing. Here is a sneak peak:

If you need, we’d be more than happy to share with you our explanation and understanding of the report, and provide you with insightful business suggestions.