[vc_row][vc_column][vc_column_text]This post is Part 2, continuation from the original post Evaluation and Reevaluation of Suppliers Part 1.

In this post, we look at the criteria for selection and reevaluation of suppliers as well as the analysis of data on suppliers.

Criteria for selection of suppliers

Once the supplier evaluation criteria have been established and suppliers have been evaluated using such criteria, the next step is to select the suppliers based on the results of the evaluation. You as an organization are going to determine how suppliers are going to be selected in order to become your supplier.
Questions you may ask are:

• Will one person be enough to approve any supplier or would you need two people.
• Would an engineer’s signature be sufficient to approve any supplier or would you need a quality person also.
• Would the CFO or a representative from Finance be needed to approve critical suppliers, along with the President, Production Manager and Quality Manager?
• Shall Level 1 suppliers be approved by a defined team of managers, while Levels 2 and 3 be approved by the hiring manager?

For example in the case of the chemical company you may decide that carriers get approve by the Logistics Manager, while Oxygen, Solvents, etc, get approve by a representative from Quality in conjunction with a representative from Operations and the Plant Manager. Contractors may get approve by a representative from Maintenance along with a representative from Engineering, or the head of Engineering, if you so desire.

In essence, you decide the controls needed to select and approve the supplier. If you decided to segregate suppliers based on how critical they are for your organization, then approval requirements would also be commensurable to the supplier level of criticality. If you do not classify the suppliers, then you still have task to decide how suppliers are selected after evaluation is conducted.

Should approved suppliers be added to an approved supplier list?

You should be able to identify your approved suppliers, however the used of an Approved Supplier List (ASL) or Approved Vendor List (AVL) is not mandatory. While some organizations may indeed have a spreadsheet or other type of document listing all their approved suppliers, some organizations may have their approved suppliers as part of their MRP software, purchasing software, etc. Therefore if the supplier is listed in the MRP, then it means the supplier is approved.

Rather than trying to copy what other companies are doing, analyze what your company uses before you embark into creating a document just for ISO purpose. For example if your purchases are done through an MRP system, then having a spreadsheet with a list of approved suppliers will require additional up keeping, such as updating the spreadsheet every time a new supplier is added or deleted from the MRP. If your MRP software is not capable of telling you who is approved or not, or who is active or not, or what level of criticality a certain supplier has, then you may indeed need to maintain two documents. So my advice is to plan well before you create another document.

So with those two elements–evaluation and selection- you have covered one of the requirements of element 7.4 of the standard. Unfortunately, many organizations end here; not fulfilling the extent of the requirements.

Criteria for reevaluation of suppliers

Once again, if you have a lot of suppliers and if you followed the advice of segregating suppliers in tiers then reevaluation should be accomplished much easier. For example, you may decide:

• Tier 1 critical suppliers will be reevaluated every month, based on the following criteria:
  • Supplier corrective actions
  • Returns
  • On time delivery
  • Customer complaint related to supplier
• Tier 2 suppliers will be reevaluated once a year based on supplier corrective actions
• Tier 3 suppliers will be reevaluated every 2 years based on returns

While the criteria mentioned in the above example is not a survey, most organizations will develop a survey that again, can combine various criteria and measure the supplier in different dimensions. However a survey is not the only way to evaluate suppliers and in many cases is not even the optimum way. As you may read later on in this article, the information you obtained from re-evaluation could very well help you with the requirement of analysis of data.

So, whether you separate your supplier or not, you have to decide the criteria for reevaluation. If you don’t have many suppliers, then perhaps conducting the same evaluation for all suppliers may suffice. The idea is that your company should benefit from implementing supplier reevaluation, so that you as an organization can monitor supplier performance and decide when to praise them and when to issue a red flag. In the end a bad supplier will provide you mediocre products and services and ultimately will cause a problem with your own customers.

What happens in the long run?

It is very important that you pay close attention to the implementation of these activities because the way you establish how suppliers will be evaluated and reevaluated will have an effect on your company’s product and service quality.

It is really in your best advantage to think this process out before you decide the criteria. If you decide to implement an evaluation that is too cumbersome then most likely the evaluation will be dropped out after one year and never be followed again. Perhaps initially, you develop a nice form, everybody works really hard to get everything done and you get ISO certified. However once everyone goes back to their normal business, they have a lot of work and guess what, the ball gets dropped and nobody will follow up on anything that is time consuming and useless. Therefore you have to really think your methods so that they are not only simple but also add value to your organization and can be easily monitored for years to come.

Analyzing data on suppliers

The requirement set forth in clause 8.4 d of the ISO 9001 standard requires that you analyze data on suppliers. The intent of the standard is to show that you have visibility as to how your suppliers are performing and so that if they are not performing well then you have the opportunity to do something about it. If you don’t analyze the data then you don’t have visibility and therefore what good does it do to fill a bunch of paper forms for suppliers, stack them or file them and never look at them. Yes you may have conducted the re-evaluation as planned but if you are not looking at the results then there is no value to this exercise. That’s why this requirement is in place, to ensure that you analyze data on suppliers so that you know what is going on with them. Here are some good metrics to analyze:

• On-time delivery
• Return rates
• Number of Supplier Corrective Action (SCAR)
• Combination of the 3 items above

Our advice is to think about analysis of data when you decide on your methods for supplier re-evaluation. If the re-evaluation is able to yield some kind of data that can be analyzed, then you will accomplish these requirements simultaneously. Otherwise, if you decide to revaluate suppliers using a survey, you may have to figure out a different way to analyze data on suppliers, unless you can weigh the answers of the survey and somehow, be able to know how suppliers are performing against a defined target. If you can say, supplier A is doing 90%, supplier B is doing 80% and the goal for all suppliers is 95% -on whatever dimension you decide- then that is data that you can easily compare and act upon.

With clear information, making decisions regarding suppliers will be an asset to your company. Decisions such as dropping a supplier for poor performance, putting a supplier on probation, giving a supplier additional business because of excellent performance, etc. are just a few of the direct benefits of implementing the 7.4 requirement of the standard effectively.[/vc_column_text][/vc_column][/vc_row]