Using effective supplier appraisal .

techniques to improve the supply chain

Suppliers can have a significant bearing on the success of an organization and businesses can introduce a number of problems through inadvertently using poor or inappropriate suppliers. Issues can include poor quality goods, ineffective delivery schedules and poor service levels which can all impact the procuring company in varying degrees. For many organizations protecting the supply chain through effective sourcing is a key task. The management of this is usually achieved through the implementation of an approved supplier list coupled with an effective appraisal .system The reason behind an approved supplier list is simple enough, the list comprises the suppliers that are approved! to be used and have passed through some form of assessment. The approved suppliers list acts a control for the buying community to ensure that only suitable suppliers are used. "valuation therefore acts as the initial stage in identifying organizations with suitable controls and capacity that can supply .the desired products or services #hilst there is no standard evaluation method there are several areas that should be considered, as a result supplier appraisal often includes criteria to ensure the supplier $is Technically sound % &anagerially competent % 'dequately resourced % Financially stable % )(ompetitive )often in terms of price and availability % *eliable % +rovides goods of suitable quality % "nvironmentally,"thically sound % ."ach factor can be weighted according to their importance to the procuring company From time to time new organizations will need to be added to the approved supplier list and an appraisal is carried out. There are two typical methods of obtaining $evaluation information -uestionnaire % Supplier .isit % It should be remembered that obtaining accurate information can sometimes be tricky and due time and resource should be committed to the evaluation process. This should involve a range of personnel from the buying company who are stakeholders in the material being procured. This may typically involve the -' dept but should be e/tended to manufacturing and,or engineering teams. 'nother crucial aspect is that an effective process is required to capture new suppliers )prior to an order being raised0 .and to prevent use prior to appraisal #hile supplier evaluation should be seen as a critical process it is not without problems. "valuation can be resource intensive and can create a bottleneck between the supplier and buyer this is especially true where evaluation data is difficult to .obtain For most organizations appraisal is a continuing process and becomes part of an integrated supplier management process. Thus the appraisal process may be carried out intermittently, often on an annual basis to ensure that once a supplier is added to

the approved supplier list to ensure its performance against the appraisal criteria is .maintained 1 The advantages to running an evaluation program are various and include +oor supplier are weeded out prior to use .2 Identified weaknesses of suppliers that are approved can be targeted by .3 improvement programs "ach organization gains understanding over potential influencers of the relationship .4 (ompany spend can be leveraged on approved suppliers .5 (ustomer service levels are secured .6 Supplier appraisal is one activity which supply chain teams undertake that can have real bottom line fiscal impact. 7et it wrong or have none at all and the business can find itself aligned with improper suppliers, ineffective goods and impractical delivery schedules 1 get it right and the organization can be positioned with suppliers who are .focused and tuned alongside the needs of the business

Supply Chain KPIs Understanding Supply Chain Metrics and Choosing the ight KPIs to Measure
8y Sam &iller 7etting your supply chain management right can give your business competitive advantage by lowering costs, greater efficiency and improving customer satisfaction by getting goods to customers faster. The impact of technology with the use of *FI9 tags to track pallets and shipments electronically and merging this into the stock and order management system is making the S(& aspect of a business an area of .substantial opportunity for creating competitive advantage :ow that all sounds fantastic with the ability to track individual shipments through the supply chain and maintaining data on product, serial codes, description, quantity and so on. (ombining *FI9 data with barcode information creates even more .information that can be manipulated and collected In truth though, what we have is a ;+I nightmare with such a huge choice of metrics to choose from we are at serious risk of ;+I overload with metrics duplicating .information and business trends leading to information overload for management *emember that using ;+I<s effectively means that you first must select the right metrics to measure and ensure that managers fully understand what those metrics are actually telling them. The best metrics to use are those that combine in a ratio form and this means that we lose some of the underlying raw data trend that is available. (ombining delivery time with order value will give us an inde/ of how well we are at getting our order pipeline to our customer base but the smoothing effect of the ratio will hide long delivery times for low value products which may increase rather than decrease overall customer satisfaction leading to a knock on effect in customer care .and contact center ;+I<s #ith any ;+I scorecard system, choosing the right metrics is essential and less is also more. *emember +areto<s +rinciple, =>? of the benefit will be derived from 3>? of the activity 1 the same applies with your metrics. Scorecards carrying twenty or thirty

metrics are going to overload decision makers using the dashboard so keep it simple .and reduce the metrics being used to those that are essential 'llowing the metrics to be reduced means that managers can gain a far more intimate knowledge of what a metric is actually trying to tell them and this makes the difference between using the dashboard for a simple performance against target check and really unleashing the diagnostic and management power of a the ;+I metrics. #ith the massive influ/ of data that is being collected and collated by an S(& system, it is very tempting to rush headlong into trying to use all of this information. The fact is that in those ;+I systems where metric selection is rigorously kept to a minimum, managers tend to make more successful decisions that their counterparts .operating a complicated, metric overloaded dashboard The adage here is that less is more and following +areto<s +rinciple, 3>? of your metrics are going to give you =>? of the S(& information you really need to make .effective management decisions If you are interested in learning more about supply chain kpi, check Sam &iller new .web@site