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KEY FINDINGS
Establishing Comprehensive Supplier Qualification Processes
BENEFITS CHALLENGES
KEY FINDINGS
Company Capsule Cadbury Schweppes is a leading global confectioner and soft drink producer. Since
Industry: Food Manufacturing the company increasingly sources from global suppliers, the procurement function
2005 Sales: Over $5 Billion must ensure new global suppliers’ compliance with the firm’s quality and ethical
2005 Employees: Over 50,000
sourcing standards. To improve management of global supplier qualification
information, the company created a supplier information database called FLAIR. The
database tracks supplier qualification requirements and directs management attention
to areas of concern.
The graphic below outlines Cadbury Schweppes’ standard supplier selection process.
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procurement to track supplier
qualification information,
record audit results, and
monitor document expiration
Potential suppliers Procurement inputs FLAIR’s color- FLAIR Procurement asks
dates.
submit RFI and supplier coded automatically suppliers to
prequalification qualification “stoplights” notifies category provide updated
questionnaire information and record audit managers when qualification
performance history results supplier information
into FLAIR documentation
nears expiration
Stoplights within FLAIR direct “stoplight” system. Red scores indicate suppliers do not meet qualification
management attention to standards, yellow scores highlight key issues requiring resolution, and green
potential suppliers unable to scores identify suppliers audited and approved for work with the company.
meet qualification criteria.
Additionally, the system enables procurement to effectively measure number of
suppliers audited and approved for work in the previous six months.
The procurement function currently qualifies and manages over 3,000 global
suppliers through the database.
Salt River Project (SRP) is one of the largest US government-owned utilities. The
Company Capsule procurement function emphasizes supplier compliance with firm-wide health and
Industry: Electric Utilities
• 2005 Sales: Between $1-5 billion safety standards since suppliers conduct a significant proportion of services on SRP
• 2005 Employees: Under 10,000 property. Procurement Services maintains responsibility for evaluating and
approving new suppliers and collaborates with Risk Management to establish and
measure supplier risk levels.
SRP enters all potential suppliers into an ERP system. Once suppliers demonstrate
compliance to required health and safety standards, SRP integrates approved supplier
information into a central repository called the Supplier Information Database
(SIDS). Procurement Services and Risk Management employ the following steps to
evaluate supplier risk during qualification:
W-9 form
Request for taxpayer identification number and
certificates.
Risk Management establishes 1. Establish consistent safety standards: Risk Management develops and
safety standards, monitors maintains a set of criteria to measure supplier risk through a Contractor
supplier risk, and verifies
vendor insurance information.
Safety Management Program (CSMP) questionnaire (see Appendix B, page
17). The questionnaire covers topics including historical safety incidents,
Occupational Safety & Health Administration (OSHA) recordable
incidents, and internal safety and health training programs. Potential
suppliers must meet or exceed a minimum standard recommended by Risk
Management. The minimum standard is based on supplier size and level of
risk relevant to services rendered. Senior management may override the
qualification criteria for unique situations.
Procurement Services reviews 1. Verify supplier stability: Procurement Services reviews Dunn & Bradstreet
supplier registration reports, calls references, and analyzes suppliers’ risk profiles compiled by
information, checks
Risk Management. In some cases, Procurement Services contacts references
government watch-lists, and
verifies state certificates. for further verification.
• Data integration: Procurement Services next integrates vendor data from the
Procurement Services ERP and RMIS systems into a single application called the Supplier Information
maintains a Supplier Database (SIDS). The SIDS system tracks product and service information,
Information Database to track
supplier qualification work history, and safety records for all approved suppliers. To remain in the
information and past database, suppliers must resubmit registration information every two years.
performance. Additionally, the system enables internal business units to identify suppliers
based on internal commodity codes, enter comments, and track supplier
performance and historical issues.
The following graphic outlines ownership over different activities during SRP’s
extensive supplier qualification process.
Procurement Services:
• Send qualification requirements to potential suppliers
Initial • Enter potential supplier information into ERP system
Registration Supplier:
• Submit pre-qualification questionnaires, safety certifications, financial
information, and references
• Complete Contractor Safety Management Program (CSMP) questionnaire
Risk Management:
• Enter supplier responses to CSMP questionnaire into Risk Management
Procurement Services and Risk Safety and Risk Information System (RMIS)
Managements collaborate to Assessment • Verify and track supplier insurance coverage through RMIS
track supplier safety • Compile supplier risk profiles
information, compile supplier
risk profiles, and verify Procurement Services:
insurance coverage during the • Review Dunn & Bradstreet reports, call references, and analyze supplier
second qualification stage. risk profiles
Registration • Check suppliers against government watch-lists
Verification • Verify state license information
Procurement Services:
• Integrate approved supplier information from ERP and RMIS systems
into Supplier Information Database (SIDS)
Data
Integration
The following flowchart outlines the process for qualifying and selecting direct
suppliers at ON Semiconductor.
Yes
New Quote
Other Supplier
RFQ top suppliers
RFQ potential suppliers
(Sourcing Manager)
(Sourcing Manager)
The table below summarizes general qualification criteria Strategic Sourcing uses to
evaluate potential suppliers during the supplier qualification process outlined on the
previous page.
Service Levels
Support and participate in ON Semiconductor’s
key programs and initiatives
Critical Products
Either offer products or services critical to the
firm’s operations or unavailable through existing
suppliers
ON Semiconductor conducts
2. Process capability: Strategic Sourcing conducts on-site quality
on-site quality assessments of assessments of all new suppliers as a systematic examination of
all new suppliers. manufacturing, packaging, and shipment processes.
Cadbury Schweppes has established a Vendor Approval Process for all new suppliers that uses the following detailed set of questions
as part of the selection procedure. The prequalification questionnaire provides basic information on operations of the company and
approach to issues of concern. Suppliers must meet minimum standards to conduct business with Cadbury Schweppes.2
Company Details
Company Name
Street Address
Town
County
Post Code
Country
Web Site
Primary Contact
Name
Title
Phone
Fax
Email
Mobile/Cell Phone
1.3 If you are completing on behalf of a subsidiary company, provide your parent company details below.
2. PREREQUISITES
Scoring
2.1 Do you accept that any subsequent agreement could be based on the [company] "Standard Terms & Conditions"? Yes 1
2.4 Do you agree to work towards the [company] "Ethical Sourcing Standard"? Yes 1
3.2 As part of a formal programme do you document reasons for delivery failures and have action plans in place to prevent underlying Yes 1
problems from recurring?
3.3 Do you have a documented policy/procedure that states that you will notify customers in advance if their requested delivery dates will be Yes 1
missed?
3.4 Please indicate which third-party certification/audit approval you have or are committed to achieving within 18 months
from these [company]-approved programmes?
BRC Global Standard -- Food A Grade
BRC Global Standard -- Food B Grade
AIB Standard--Superior Rating
AIB Standard--Excellence Rating
IFS Standard--Higher Level
BRC/IoP Global Standard--Food Packaging 1B (food contact material)
AIB Food Contact Packaging Standard--Superior Rating
AIB Food Contact Packaging Standard--Excellence
Other
3.5 If other or several, please specify below (ISO9001:2000 by itself is not sufficient):
3.6 To which recognized quality management systems are your operations certified?
ISO9000-2000
Any others (please specify below)
None
3.8 Do you operate a documented quality-management system which covers the manufacture and supply of the product/service under consideration? Yes
1
3.9 Do you comply with the food regulations applicable in both the country of origin/production and the country of sale? Yes 1
3.1 Do you have a formal and current business continuity/disaster recovery plan(s) in place that are available on request? Note: These plans should Yes 1
address both recovery of production capacity, product recall / withdrawal, and continuity of service.
3.11 Does your organization maintain an active and formal Incident Management Team to deal with product integrity issues? Yes 1
3.12 Have you ever been involved in a voluntary withdrawal or mandatory recall regarding the materials to be supplied to [company]? Yes 1
3.14 Do you have the ability to specify which location produces supplies for [company] requirements? Yes 1
3.15 Can you demonstrate traceability of the raw materials used to produce products by batch or lot back to your supplier? Yes 1
3.16 Can you demonstrate traceability of products produced by batch or lot forward to your customer ? Yes 1
4. FINANCIAL/INSURANCE/LEGAL INFORMATION
Scoring
4.1 Please provide your Dun & Bradstreet number (if known)
4.2 Please provide your Dun & Bradstreet ratings (if known) D&B rating
D&B failure score
4.3 Please provide the the following financial information for the last three financial years
4.7 Is your organization currently involved in any claims and/or litigation? Yes 1
5. ETHICAL SOURCING STANDARDS - Environment, Health & Safety/ Human Rights and Ethical Trading/ Sustainable Agriculture/ Bribery
and Corruption
Scoring
5.1 Specify country for location producing supplies for [company] requirement:
5.2 If your answer is "Other," please specify. If your factories able to supply [company] are in more than one country, please indicate the most important location in
the previous question and others in this question:
5.3 Specify the country where you buy raw materials used to make supplies for [company]:
5.4 If your answer is "Other," please specify. If you buy raw materials in more than one country, pelsae indicate the most important location in the previous question
and others in this question:
5.5 Has your company been charged with/fined for any infringements of national legislation in the last three years? Yes 1
5.6 Do you have a policy covering some / all issues included in the [company] "Ethical Sourcing Standard" that you implement with your Yes 1
suppliers?
5.9 Against which standard has your business undergone an assessment or audit of your ethical sourcing practices?
Self-assessment
Customer assessment
Third-party assessment
None
(Third-party includes SA8000/ETI, etc.)
(Please provide copies)
5.10 Do you have one EHS (Environmental and Health & Safety) policy or separate Environmental and Health & Safety Policies? Yes 1
5.11 Who is responsible for EHS issues and performance in your company? (Please provide contact details).
5.12 Do you maintain a register of the Environmental and Health & Safety laws that apply to your sites and operations? Yes 1
5.13 Do you have a documented management system to manage EHS issues? Yes 1
5.15 If yes, please provide your accident statistics (total number of accidents and LTIFR - Lost Time Injury Frequency Rate per 200,000
manhours) for last year:
(Lost Time Injuries are those which are serious enough to cause an employee to be away from work)
5.16 Have the health and safety risks for your company been formally assessed? Yes 1
5.17 Do you track your usage of energy (electricity, gas, oil, coal) and water at each site? Yes 1
5.18 Do you operate to an agreed Code of Practice with regard to ethical trading based, for example, on SA8000, Ethical Trading Initiative (ETI) Yes 1
etc.?
5.19 Do you recognize unions and / or allow alternative means of worker representation? Yes 1
5.20 Are you willing to give an undertaking that forced labor is not/will not be used in your operations? Yes 1
5.21 Are you willing to give an undertaking that child labor is not/will not be used in your operations? Yes 1
5.22 Are you willing to give an undertaking that no physical or degrading punishment is used in the workplace? Yes 1
5.23 Do the working hours and remuneration in your organization meet local legal minimum standards and comply with local laws? Yes 1
5.24 Do you have a policy covering diversity-related issues and provide employees with equal opportunities? Yes 1
5.25 Do you have a policy on sustainable agricultural practices for the raw materials you supply? Yes 1
5.26 Do you have systems in place to protect related ecosystems, habitats, biological diversity and wildlife conservation in the growing areas of Yes 1
the raw materials you buy and/or supply?
5.28 Do you have a policy on speaking up (whistle blowing) within your organization and/or do you provide a means for raising issues that could Yes 1
include criminal conduct/illegal activity, dishonesty - theft/fraud, environmental or safety concerns, integrity of financial reporting, conflicts
of interest, regulatory compliance?
5.29 Has your company or have any of its officers, agents or employees (during the course of their duties in relation to the company) ever been Yes 1
or currently are, the subject of an investigation by a law enforcement/magistrate/custom agency/tax authority or any central/regional/local
government authority?
6.3 Signed
Name
Position in Organization
Date
6.4 Appendices ([company] conditions, agreements, standards & policies) Total Scoring 0
Salt River Project (SRP) requires potential suppliers to complete the following pre-qualification safety questionnaire during initial
registration. This document enables the Procurement Services and Risk Management functions to evaluate supplier risk based on
safety compliance history and training programs to track and improve health and safety performance.
SRP reserves the right to conduct random or for-cause audits of the information stated in this questionnaire.
Additional documentation may be requested by SRP to support statements made on the questionnaire.
Company Name
Street Address
Name
Title
REMEMBER
This form MUST be completed and accompanied with all requested attachments for SRP
review prior to any consideration being given to any interested contractual party. If you need
additional space, please see page 4 or attach additional pages.
Name:
Title:
Mailing Address:
Phone Number:
Email Address:
Number of Employees
Corporate
Subsidiary
Local
State
National
A - SAFETY HISTORY
Provide Workers Compensation EMR for your company for the current year plus
each of the previous three (3) calendar years for your company as determined
by the NCCI.
YEAR No. Citations Upheld Please Explain (Attach additional sheets if needed)
Current
ATTACHMENT 2: Attach a copy of your current year OSHA 300 log sheet and the
OSHA 200/300 log sheets for each of the previous three years.
Please provide data for the current year plus each of the previous three (3) calendar years.
2. Does your company have a written Occupational Safety and Health Program?
Yes No
3. Do your work crews conduct daily pre-work Job Briefings (Tailboards) before the
start of each shift/job?
Yes No
If “Yes”, indicate when the verification is done, and with what frequency.
1. Does your company document employee specialty certifications for specific trades,
equipment or job functions (i.e., CDL, Crane Operation, Welding, etc.)? Yes No
If “Yes”, list the types of specialty certifications maintained in your company files.
Certifications
2. Have any of your employees completed OSHA 500 or OSHA 501 training? Yes No
Comments:
3. Have any of your employees completed OSHA 10-Hour or OSHA 30-Hour Training?
Yes No
Comments:
4. What other training have your employees completed? (For example, the Southwest Safety
Training Alliance Program, Personal protective Equipment, Excavation/Trenching Safety,
etc.)
EXPLANATIONS
Attach additional pages if additional space is required
This document seeks to provide senior procurement executives with strategies for
Project Aims establishing comprehensive supplier qualification processes. Because it employs an
abbreviated research process to maximize its timeliness, this project (by design)
does not provide an exhaustive evaluation of the problem or the practice. Looking
forward, the Procurement Strategy Council plans to periodically update this
collection as new practices and insights emerge.
While this report describes the opinions of experts and others regarding an issue of
Research key strategic concern, we cannot emphasize enough that (consistent with our
Methodology charter) we are not recommending any particular course of action.
This document is compiled from extensive primary and secondary research completed
by the Procurement Strategy Council.
ENDNOTES
1
Procurement Strategy Council. “Supplier Certification and Auditing Processes in the Consumer Goods
Industry.” Washington, DC: Corporate Executive Board (December 2003).
2
Procurement Strategy Council. “Procurement Social Responsibility.” Washington, DC: Corporate
Executive Board (March 2006).