Sie sind auf Seite 1von 22

PROCUREMENT STRATEGY COUNCIL TM JULY 2006

www.psc.executiveboard.com

KEY FINDINGS
Establishing Comprehensive Supplier Qualification Processes

Related Council ISSUE OVERVIEW


Research:
As organizations increasingly collaborate with fewer strategic suppliers, procurement
BUILDING AGILE SUPPLIER organizations face the challenge of driving supplier improvement through
QUALIFICATION PROCESSES quantifiable and clearly defined evaluation criteria. The supplier qualification
(DECEMBER 2005) process helps identify candidates for strategic relationships, facilitates
communication with potential suppliers, and ensures new suppliers meet firm-wide
ENSURING SUPPLIER quality, management, and safety standards.
PRODUCTION QUALITY: KEY
FINDINGS Leading companies recognize the importance of comprehensive supplier
(JULY 2004)
qualification processes but struggle to communicate qualification requirements to
OPTIMIZING POLICIES AND
potential suppliers, create baselines for evaluating supplier risk levels, and ensure
PROCEDURES FOR ONSITE material conformance to specific requirements. Some procurement functions adopt
SUPPLIER AUDITS: INITIATIVE recognized qualification standards to evaluate product quality during supplier
SNAPSHOT qualification. International standards, such as ISO 9000 or TS-16949, promote broad
(FEBRUARY 2006) participation and qualification of suppliers and create selection criteria for several
processes including design control, inspections, equipment testing, handling, storing,
packaging, and delivery.

Recognized qualification standards such as ISO 9000 outline management processes


and enable high-quality production, but may prove too general for industry
specifications. As a result, companies often create supplementary criteria to ensure
comprehensive supplier evaluations and applicability to specific industry needs. The
table below outlines benefits and challenges procurement executives must consider
prior to adopting standard or custom qualification criteria.1

CUSTOM VERSUS RECOGNIZED QUALIFICATION STANDARDS


Aligning the qualification process with company needs

BENEFITS CHALLENGES

ƒ Customizes supplier evaluations to ƒ Requires extensive development


S meet organization’s needs time and capital commitment
CUSTOMIZED ƒ Focuses on industry-specific ƒ Creates lack of uniformity across
Based on specificity of o CRITERIA
u standards business units and results in
the organization’s ƒ Addresses each supplier’s supplier miscommunications
needs and available r
respective development areas
resources, companies c
can either adopt or e
develop qualification : ƒ Reduces need for preliminary ƒ Costly process for suppliers
standards. STANDARD qualifications and site visits ƒ Does not guarantee continuous
P CRITERIA ƒ Provides an internationally quality improvement
r recognized foundation for quality ƒ Quality standard too general for
o measurement specific materials
I

Source: Procurement Strategy Council Research (2003)

 2006 CORPORATE EXECUTIVE BOARD. ALL RIGHTS RESERVED.


PROCUREMENT STRATEGY COUNCIL PAGE 2
ESTABLISHING COMPREHENSIVE SUPPLIER QUALIFICATION PROCESSES

In addition to establishing appropriate selection criteria, procurement functions also


need to maintain clear communication channels with potential suppliers at each stage
of the qualification process. The function can choose from a variety of online tools,
handbooks, or databases to establish expectations and requirements.

Comprehensive supplier qualification processes and tools enable organizations to


monitor supplier performance history and direct management attention to suppliers
unable to meet qualification criteria. By establishing and measuring performance
baselines, Procurement can save time and resources by disqualifying suppliers that
do not meet required company standards.

To assist members with challenges in implementing effective supplier qualification


procedures, the Procurement Strategy Council presents the following findings.

KEY FINDINGS

Council research identified several strategies procurement organizations implement


to ensure optimal and consistent supplier qualification standards, including the
following:

• Deploy electronic tools to manage qualification data: As companies


increasingly shift sourcing strategies to encompass multiple markets,
procurement functions should maintain supplier portals or automated data
management systems to track qualification information for global suppliers.
Global electronic databases increase transparency across procurement staff and
business units. This visibility increases access to qualification requirements and
audit results and encourages communication with suppliers to quickly resolve
identified issues.

Procurement at Cadbury Schweppes (profiled on pages 4-5) manages the


qualification process for over 3,000 global suppliers through a supplier
information database called FLAIR. The database automatically asks suppliers
to provide additional or updated qualification information, including suppliers’
commercial status, ethical sourcing standards, innovation strategies, and
business models. A color coded “stoplight” system within FLAIR records audit
results and enables the procurement function to determine need for additional
onsite audits of supplier facilities.

• Establish and measure supplier safety risk levels: To ensure potential


suppliers meet firm-wide health and safety standards, procurement functions
should require suppliers to supplement general qualification requirements with
safety and insurance information. Some companies evaluate supplier risk based
on Occupational Health & Safety Administration (OSHA) reportable accidents,
while others require suppliers to complete detailed ethical assessments on
policies and management practices.

At Salt River Project (SRP) (profiled on pages 6-8), Procurement Services


collaborates with Risk Management during the supplier qualification process to
track supplier safety information, compile supplier risk profiles, and verify
insurance coverage. Risk Management develops and maintains a set of safety
criteria measured through a Contractor Safety Management Program (CSMP)
questionnaire. Contractors and service providers must meet or exceed a
minimum risk score recommended by Risk Management to conduct business
with SRP.

 2006 CORPORATE EXECUTIVE BOARD. ALL RIGHTS RESERVED.


PROCUREMENT STRATEGY COUNCIL PAGE 3
ESTABLISHING COMPREHENSIVE SUPPLIER QUALIFICATION PROCESSES

• Verify product quality levels: In addition to general qualification criteria,


procurement functions must ensure that direct material suppliers’ products
conform to the firm’s quality standards and specification requirements. The
function should review supplier sample materials and manufacturing capabilities
through on-site assessments and product reliability tests. Procurement should
use these assessments to inform supplier selection and as a benchmark for post-
contract performance evaluations.

Strategic Sourcing at ON Semiconductor (profiled on pages 9-11) mandates


direct material suppliers to complete a quality system self-assessment, submit
quality certificates, and provide product samples for reliability testing prior to
final approval. By incorporating additional material verification steps during the
supplier qualification process, the function ensures suppliers’ products meet
quality and durability standards, as well as conform to required specifications.
Additionally, Strategic Sourcing utilizes a Specification Automated Mailing
System (SAMS) to update suppliers with applicable material specification
revisions.

 2006 CORPORATE EXECUTIVE BOARD. ALL RIGHTS RESERVED.


PROCUREMENT STRATEGY COUNCIL PAGE 4
ESTABLISHING COMPREHENSIVE SUPPLIER QUALIFICATION PROCESSES

INITIATIVE PROFILE: CADBURY SCHWEPPES UTILIZES A GLOBAL ELECTRONIC DATABASE


TO MANAGE QUALIFICATION REQUIREMENTS

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.

CADBURY SCHWEPPES’ STANDARD SUPPLIER QUALIFICATION PROCESS


Cadbury Schweppes leverages technology to manage new supplier qualification
information

The FLAIR database enables

!
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

Source: Cadbury Schweppes; Procurement Strategy Council Research (2006)

FLAIR assists Procurement to manage qualification requirements during the full


supplier qualification process, as outlined below:

• Register new suppliers: During initial registration, Procurement enters


suppliers’ background information into the FLAIR database.

• Evaluate suppliers in a competitive market environment: Procurement


requires potential suppliers to complete a Request for Information (RFI) and a
supplier prequalification form (see Appendix A, page 12). The prequalification
form includes detailed questions on the following four key selection criteria:

1. Financial qualification: Dunn & Bradstreet financial reports and insurance


The supplier prequalification information.
form includes questions on 2. Ethical sourcing standards: Policies and performance related to
financial information, ethical
sourcing standards, research environment, health, and safety standards.
capability, and expected future 3. Research and development: Innovation capabilities, level of research
growth. commitment, and alignment on common future development goals.
4. Business model: Expected growth in specific geographic areas.

Suppliers must meet all prequalification requirements to conduct business with


Cadbury Schweppes. By tracking qualification information within FLAIR,
Procurement identifies missing information and encourages potential suppliers
to conform to company standards.

• Audit new suppliers: At Cadbury-Schweppes, the procurement function audits


new suppliers across all spend categories during the supplier qualification
process. The FLAIR database tracks audit results through a color-coded

 2006 CORPORATE EXECUTIVE BOARD. ALL RIGHTS RESERVED.


PROCUREMENT STRATEGY COUNCIL PAGE 5
ESTABLISHING COMPREHENSIVE SUPPLIER QUALIFICATION PROCESSES

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.

• Monitor supplier certifications: During the supplier qualification process,


category managers maintain responsibility for communication with potential
suppliers. To ensure compliance with enterprise-wide policies and procedures,
these individuals meet with suppliers on a quarterly basis to assess selected key
performance indicators (KPIs) on service quality and delivery. The FLAIR
database automatically notifies category managers when supplier documentation
nears expiration and requires renewal.

The procurement function currently qualifies and manages over 3,000 global
suppliers through the database.

By incorporating a supplier information database into the qualification process,


Procurement manages the Cadbury Schweppes’ procurement function monitors qualification requirements,
qualification process for over increases transparency across the department on supplier performance history, and
3,000 global suppliers through
the FLAIR database. encourages communication with suppliers to quickly resolve identified issues.
Additionally, procurement staff can create a single globally accessible entry within
FLAIR to track qualification information and audit results for new suppliers
providing goods or services in more than one region.

Currently Procurement manually transfers supplier information from the FLAIR


database into the company’s larger supplier management software enabled by
Procuri. The software enables procurement staff to track previous communication
with suppliers and utilize standard templates during the sourcing process. Cadbury
Schweppes is developing an automated system to integrate supplier information from
the FLAIR database to Procuri and plans to implement the new system by the end of
2006.

 2006 CORPORATE EXECUTIVE BOARD. ALL RIGHTS RESERVED.


PROCUREMENT STRATEGY COUNCIL PAGE 6
ESTABLISHING COMPREHENSIVE SUPPLIER QUALIFICATION PROCESSES

INITIATIVE PROFILE: SRP’S PROCUREMENT FUNCTION COLLABORATES WITH RISK


MANAGEMENT TO EVALUATE SUPPLIER RISK DURING QUALIFICATION

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:

• Initial registration: As a first step in evaluating supplier risk, Procurement


Services requires suppliers to submit a pre-qualification safety questionnaire in
addition to general contact information, W-9 forms, and references. Once
suppliers provide all registration information, Procurement Services enters the
data into an ERP system. The checklist below outlines qualification information
suppliers must submit during initial registration.

SALT RIVER PROJECT’S INITIAL REGISTRATION REQUIREMENTS


Procurement Services requires the following qualification information during initial
registration

Supplier Information Database (SIDS) questionnaire


A brief questionnaire containing questions on general
contact information, state licenses, financial information,
and references.

Contractor Safety Management Program (CSMP)


pre-qualification questionnaire
SRP requires suppliers to complete a pre-qualification
safety questionnaire for on-site work at SRP facilities,
work locations, or other properties.
During initial registration,
suppliers must submit pre-
OSHA 200 / 300 Log
qualification questionnaires,
Suppliers must submit copies of current year
copies of safety and insurance
Occupational Safety & Health Administration (OSHA)
certificates, and financial
300 log sheets and OSHA 200/300 log sheets for
information.
previous three years

Experience Modification Rating (EMR)


Suppliers must submit copies of Experience
Modification Ratings (EMRs) for current year and
previous three years. EMRs must be certified by
suppliers’ insurance carriers.

W-9 form
Request for taxpayer identification number and
certificates.

Source: Salt River Project; Procurement Strategy Council Research (2006)

 2006 CORPORATE EXECUTIVE BOARD. ALL RIGHTS RESERVED.


PROCUREMENT STRATEGY COUNCIL PAGE 7
ESTABLISHING COMPREHENSIVE SUPPLIER QUALIFICATION PROCESSES

• Safety and risk assessment: Risk Management supports Procurement Services


to establish standard controls and evaluate supplier risk through the following
procedures:

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.

2. Monitor supplier risk: Risk Management enters supplier responses to the


CSMP questionnaire into a central database called the Risk Management
Information System (RMIS). Based on performance on the CSMP scale,
Risk Management compiles a risk profile for potential suppliers. Safety
scores are valid for a period of three years. The database enables effective
tracking of risk scores to ensure suppliers update safety information prior to
expiration.

3. Verify insurance coverage: SRP requires the following insurance coverage


for any supplier or contractor performing services on SRP facilities,
properties, or job sites:
Procurement Services
disqualifies suppliers that do • Worker’s Compensation: Statutory
not meet required insurance
coverage.
• Commercial General Liability: $2 million
• Commercial Auto Liability: $2 million
• Architect and Engineering Liability: $1 million

Risk Management gathers supplier insurance certification and stores


information in the RMIS database for future reference. The department
monitors expiration dates and sends letters to suppliers when certificates
near expiration. After two failed attempts, Risk Management notifies
Procurement Services to obtain certification directly from suppliers.

• Registration verification: Once Risk Management completes supplier risk


assessments, Procurement Services performs the following additional
qualification checks on new suppliers:

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.

2. Review government watchlists: Procurement Services checks suppliers


against the Office of Foreign Assets Control’s list of Specially Designated
Nationals and Blocked Persons and the Department of State’s Foreign
Terrorist Organizations.

3. Validate state certification: Procurement Services verifies state certification


for all contractors before final approval.

 2006 CORPORATE EXECUTIVE BOARD. ALL RIGHTS RESERVED.


PROCUREMENT STRATEGY COUNCIL PAGE 8
ESTABLISHING COMPREHENSIVE SUPPLIER QUALIFICATION PROCESSES

• 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.

SALT RIVER PROJECT’S SUPPLIER QUALIFICATION PROCESS


Procurement Services and Risk Management functions at SRP collaborate to evaluate
supplier risk

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

Source: Salt River Project; Procurement Strategy Council Research (2006)

The CSMP questionnaire provides Procurement Services with a consistent set of


criteria to evaluate suppliers’ safety policies and programs. By collaborating with
Risk Management early in the process to establish and measure supplier risk levels,
Procurement Services continues to save time and resources by disqualifying
suppliers that do not meet firm-wide health and safety standards. Additionally, the
SIDS database enables Procurement Services staff to track number of suppliers
approved during qualification in a given time period.

 2006 CORPORATE EXECUTIVE BOARD. ALL RIGHTS RESERVED.


PROCUREMENT STRATEGY COUNCIL PAGE 9
ESTABLISHING COMPREHENSIVE SUPPLIER QUALIFICATION PROCESSES

INITIATIVE PROFILE: ON SEMICONDUCTOR ASSESSES QUALITY SYSTEMS TO QUALIFY ALL


DIRECT MATERIAL SUPPLIERS

ON Semiconductor is a leading manufacturer of power components and electrical


appliances. Given the critical role direct goods play in production and operations,
Strategic Sourcing incorporates additional quality verification steps during the
supplier qualification process to ensure conformance to material specifications.
Company Capsule Strategic Sourcing teams and supplier quality engineers collaborate to establish,
Industry: Electronics
2005 Sales: $1-5 Billion
communicate, and verify product quality requirements to potential suppliers.
2005 Employees: 10,000-50,000
When the current supply base cannot meet direct material demands, a Strategic
Sourcing manager evaluates new suppliers based on several qualification criteria,
including financial stability, physical and technical capability, cost-competitiveness,
and timeliness of delivery.

The following flowchart outlines the process for qualifying and selecting direct
suppliers at ON Semiconductor.

ON SEMICONDUCTOR’S SUPPLIER QUALIFICATION PROCESS


Strategic Sourcing inspects quality of suppliers’ product samples during the qualification
process
Requirement for direct Review current supply base
material identified (Strategic Sourcing Team)
(Strategic Sourcing Team)

Select potential suppliers Any acceptable


No
using qualification criteria from existing
(Strategic Sourcing Team) supply base?

Yes

New Quote

Other Supplier
RFQ top suppliers
RFQ potential suppliers
(Sourcing Manager)
(Sourcing Manager)

During qualification, strategic Request Quality System self


No Request new
sourcing mandates suppliers assessment & copy of Pricing quote(s) or
to complete a quality system certificate acceptable? consider other
(Supplier/Quality Engineers)
self assessment, submit quality suppliers
certificates, and provide
product samples for Yes
evaluation. Select best candidate(s)
based on: RFQ, SA, and Ask supplier to submit
criteria material samples
(Strategic Sourcing Team) (Sourcing Manager)

Perform on site quality


assessment Inspect supplier products and process
(Supplier/Quality Engineers) capabilities
(Quality Engineers)

No Recommend Yes No Parts pass Proceed with production


to qualification? order
proceed? (Sourcing Manager)
Yes

Source: ON Semiconductor; Procurement Strategy Council Research (2006)

 2006 CORPORATE EXECUTIVE BOARD. ALL RIGHTS RESERVED.


PROCUREMENT STRATEGY COUNCIL PAGE 10
ESTABLISHING COMPREHENSIVE SUPPLIER QUALIFICATION PROCESSES

The table below summarizes general qualification criteria Strategic Sourcing uses to
evaluate potential suppliers during the supplier qualification process outlined on the
previous page.

ON SEMICONDUCTOR’S SUPPLIER QUALIFICATION CRITERIA


Strategic Sourcing evaluates direct material suppliers on five qualification criteria

ON Semiconductor evaluates Competitive Advantage


suppliers based on five Demonstrate potential competitive advantage on
standardized qualification factors including cost, service, and technology
criteria
Quality Systems
Adopt recognized quality standards such as TS-
16949

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

Demand Management Capability


Maintain financial resources and infrastructure
to support current and future demands.

Source: ON Semiconductor; Procurement Strategy Council Research (2006)

In addition to general qualification criteria, ON Semiconductor requires suppliers to


adopt recognized industry-standard quality systems such as TS-16949.

ON Semiconductor’s Strategic Sourcing team implements the following practices to


ensure potential suppliers meet product quality requirements:

Strategic Sourcing examines


• Communicate product quality requirements: Strategic Sourcing directs
new direct suppliers’ quality suppliers to an online supplier handbook that outlines the company’s
standards through self- supplier quality requirements. The handbook ensures suppliers comply with
assessments and product the company’s product quality standards both before and after contract
inspections.
signing. Additionally, supplier quality engineers inform individual suppliers
of sample and data requirements and provide notification of final approval.

• Collect and review supplier self-assessments: Strategic Sourcing requires


all potential suppliers complete a quality system self-assessment based on
the TS-16949 system and provide copies of quality certificates. Any issues
identified are corrected prior to final supplier approval.

• Confirm sample products’ quality levels: Prior to the first shipment,


Strategic Sourcing implements the product verification procedure to ensure
material conformation to specifications. To enable high supplier quality, the
function reviews supplier sample materials and manufacturing capabilities
through three steps:

1. Conformance to specifications: To ensure new suppliers can


manufacture products to company specifications, Strategic
Sourcing requires suppliers submit product samples for inspection.

 2006 CORPORATE EXECUTIVE BOARD. ALL RIGHTS RESERVED.


PROCUREMENT STRATEGY COUNCIL PAGE 11
ESTABLISHING COMPREHENSIVE SUPPLIER QUALIFICATION PROCESSES

The function verifies material conformance to electrical, chemical,


structural, and mechanical requirements.

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.

3. Product reliability: The Quality Department performs liability


ON Semiconductor performs tests to ensure supplier materials conform to required
several reliability assessments specifications and meet process and product requirements. These
to ensure supplier products are tests include accelerated life and application testing.
durable.
Once supplier product samples and manufacturing capabilities are inspected,
Strategic Sourcing inputs all approved supplier information into a central repository
called the Strategic Sourcing List. The repository enables Strategic Sourcing to
identify approved suppliers for new sourcing opportunities and reduce the need to
allocate resources to qualify additional suppliers.

In addition to evaluating suppliers on consistent and objective qualification criteria,


Strategic Sourcing inspects supplier product samples, performs on-site quality
assessments, and tests product reliability. By incorporating material verification steps
during the qualification process, Strategic Sourcing ensures new suppliers’ products
conform to specification requirements.

 2006 CORPORATE EXECUTIVE BOARD. ALL RIGHTS RESERVED.


PROCUREMENT STRATEGY COUNCIL PAGE 12
ESTABLISHING COMPREHENSIVE SUPPLIER QUALIFICATION PROCESSES

APPENDIX A: CADBURY SCHWEPPES’ SUPPLIER PREQUALIFICATION QUESTIONNAIRE

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

1. MANAGEMENT & CONTACT INFORMATION


Scoring
1.1 Please provide details of your company

Company Details
Company Name
Street Address
Town
County
Post Code
Country
Web Site

1.2 Please provide details of your primary contact

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.

Parent Company Details


Parent Company Name
Street Address
Town
County
Post Code
Country
Web Site

2. PREREQUISITES
Scoring
2.1 Do you accept that any subsequent agreement could be based on the [company] "Standard Terms & Conditions"? Yes 1

2.2 Do you accept the [company] "Confidentiality/Non Disclosure Agreement"? Yes 1

2.3 Do you accept the "Operational Conditions of Supply" to [company]? Yes 1

2.4 Do you agree to work towards the [company] "Ethical Sourcing Standard"? Yes 1

 2006 CORPORATE EXECUTIVE BOARD. ALL RIGHTS RESERVED.


PROCUREMENT STRATEGY COUNCIL PAGE 13
ESTABLISHING COMPREHENSIVE SUPPLIER QUALIFICATION PROCESSES

3. OPERATIONS - Delivery, Quality, Location


Scoring
3.1 Do you measure your delivery performance to your customers? 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

3.7 If other, please specify below:

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

3.13 If Yes, provide details and current status of event(s)

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

3.17 Do you have someone responsible for quality in your organization?

3.18 Please provide his/her name, title, and function below:

 2006 CORPORATE EXECUTIVE BOARD. ALL RIGHTS RESERVED.


PROCUREMENT STRATEGY COUNCIL PAGE 14
ESTABLISHING COMPREHENSIVE SUPPLIER QUALIFICATION PROCESSES

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

£ Sterling £ Sterling £ Sterling


Turnover
Pre-Tax Profit
Current Assets
Current Liabilities
Please State Year
Please State Base Currency Used
Please State Exchange Rates Used
(Please attach your last 3 years financial accounts)

4.4 Do you hold the following insurance cover? Limit of Indemnity


Per claim Aggregate Expiry
£ Sterling £ Sterling
Public Liability/ General Third Party Liability Yes 1

Product Liability Yes 1

Employer Liability Yes 1

Professional Indemnity Insurance Yes 1

Product Recall Insurance Yes 1

Please State Base Currency Used

Please State Exchange Rate Used

4.5 Please provide details of your insurance cover extensions


Public Liability Product Sub limit
£ Sterling £ Sterling £ Sterling
Third-Party Property in Custody and Control Yes 1 Yes 1

Financial Loss Yes 1 Yes 1

Contractual Liability Yes 1 Yes 1

Indemnity to Principal Yes 1 Yes 1

Please State Base Currency Used

Please State Exchange Rate Used


(Please provide written proof of cover from your insurer/broker)

4.6 Does your recall insurance provide the following


Yours Ours

Recall costs Yes 1 Yes 1

Loss of Profits/Consequential Loss Yes 1 Yes 1

Accidental Contamination Yes 1 Yes 1

Malicious Tamper Yes 1 Yes 1

4.7 Is your organization currently involved in any claims and/or litigation? Yes 1

4.8 If Yes, provide details below:

 2006 CORPORATE EXECUTIVE BOARD. ALL RIGHTS RESERVED.


PROCUREMENT STRATEGY COUNCIL PAGE 15
ESTABLISHING COMPREHENSIVE SUPPLIER QUALIFICATION PROCESSES

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?

5.7 If yes, provide details below:

5.8 If yes, do you track your performance? Yes 1

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)

EHS (Environment, Health & Safety)

5.10 Do you have one EHS (Environmental and Health & Safety) policy or separate Environmental and Health & Safety Policies? Yes 1

([Company] EHS policy attached -- please provide copies of yours)

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

5.14 Do you keep accident statistics? 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

 2006 CORPORATE EXECUTIVE BOARD. ALL RIGHTS RESERVED.


PROCUREMENT STRATEGY COUNCIL PAGE 16
ESTABLISHING COMPREHENSIVE SUPPLIER QUALIFICATION PROCESSES

HRET (Human Rights & Ethical Trading)

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

Sustainable Agriculture (If Applicable)

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?

Bribery and Corruption

5.27 Do you have a policy on fraud within your organization? Yes 1

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. OTHER - General comments, Appendices


6.1 Please confirm that a copy of this questionnaire has been completed for all sites that might supply [company]. Yes 1
(If no, please confirm a separate questionnaire for each site)

6.2 Any other general comments

6.3 Signed
Name
Position in Organization
Date

6.4 Appendices ([company] conditions, agreements, standards & policies) Total Scoring 0

1.1 1.2 1.3 1.4


"Supplier User
"[Company]
Guide Pre- "Insurance, Legal "Ethical Sourcing
Approved Third-
Qualification Information" Standard"
Party Schemes"
Questionnaire"

 2006 CORPORATE EXECUTIVE BOARD. ALL RIGHTS RESERVED.


PROCUREMENT STRATEGY COUNCIL PAGE 17
ESTABLISHING COMPREHENSIVE SUPPLIER QUALIFICATION PROCESSES

APPENDIX B: SALT RIVER PROJECT’S CONTRACTOR SAFETY MANAGEMENT PROGRAM QUESTIONNAIRE

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.

CONTRACTOR SAFETY MANAGEMENT PROGRAM (CSMP)


Pre-Qualification Safety Questionnaire

Omitting or reporting false information on this questionnaire could result in the


disqualification or removal from the Supplier Information Database.

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

City State Zip

Company Web Address

Name

Title

Signature: ______________________________ Date:

Phone: Email Address:

THIS SECTION FOR SRP USE ONLY SRP Vendor #

Requested By: Date

Submitted By: Date

Scored By: Date CSMP Score:

Reviewed By: Date Final CSMP Score:


(Safety Services)

 2006 CORPORATE EXECUTIVE BOARD. ALL RIGHTS RESERVED.


PROCUREMENT STRATEGY COUNCIL PAGE 18
ESTABLISHING COMPREHENSIVE SUPPLIER QUALIFICATION PROCESSES

CONTRACTOR PRE-QUALIFICATION SAFETY


QUESTIONNAIRE

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.

Company / Safety Representative

Name:

Title:

Mailing Address:

City, State: ZIP:

Phone Number:

Email Address:

The Following Information Is:

Number of Employees
Corporate
Subsidiary
Local
State
National

 2006 CORPORATE EXECUTIVE BOARD. ALL RIGHTS RESERVED.


PROCUREMENT STRATEGY COUNCIL PAGE 19
ESTABLISHING COMPREHENSIVE SUPPLIER QUALIFICATION PROCESSES

A - SAFETY HISTORY

1. EXPERIENCE MODIFICATION RATE (EMR)

ATTACHMENT 1: Attach a copy of your insurance carrier’s certified letter of experience


modification rating for the current year and each of the previous three years.

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 EMR Comments


Current

2. OSHA NON-COMPLIANCE CITATIONS:


List the number of upheld OSHA Non-Compliance Citations received in the
current year plus each of the previous three (3) calendar years. Provide an
explanation of the nature of each citation and each corresponding monetary
penalty.

YEAR No. Citations Upheld Please Explain (Attach additional sheets if needed)
Current

3. OSHA 300 Safety Information

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.

3 Previous Calendar Years


Current Year
(# of Months )
Total employee hours worked
Number of Lost Time Accident/Illness
Cases
Total days away from work due to
Injury/Illness
Number of OSHA Recordable
Injury/Illness Cases
Note: Most of this information is available on the OSHA logs.

 2006 CORPORATE EXECUTIVE BOARD. ALL RIGHTS RESERVED.


PROCUREMENT STRATEGY COUNCIL PAGE 20
ESTABLISHING COMPREHENSIVE SUPPLIER QUALIFICATION PROCESSES

3 Previous Calendar Years


4. Number of Fatalities Current Year
(# of Months: )
Number of Fatalities

Please provide detailed information for each fatality on a separate sheet.

B – SAFETY & HEALTH PROGRAMS

1. Does your company have a Substance Abuse Screening Program? Yes No

If “Yes”, does your program include:


Pre-Hire Screening Testing? Yes No
Post Accident Testing? Yes No
Random Testing? Yes No

If “YES”, you may be required to submit a copy of your Substance Abuse


Program.

2. Does your company have a written Occupational Safety and Health Program?
Yes No

If “YES”, you may be required to submit a copy of your Occupational


Safety and Health Program.

3. Do your work crews conduct daily pre-work Job Briefings (Tailboards) before the
start of each shift/job?
Yes No

4. Does your company conduct valid Driver’s License Record Verification


on ALL employees required to operate a company vehicle on the job? Yes No

If “Yes”, indicate when the verification is done, and with what frequency.

 2006 CORPORATE EXECUTIVE BOARD. ALL RIGHTS RESERVED.


PROCUREMENT STRATEGY COUNCIL PAGE 21
ESTABLISHING COMPREHENSIVE SUPPLIER QUALIFICATION PROCESSES

C – CERTIFICATION, SPECIAL TRAINING

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.)

Please identify the type and frequency of the training provided.

EXPLANATIONS
Attach additional pages if additional space is required

 2006 CORPORATE EXECUTIVE BOARD. ALL RIGHTS RESERVED.


PROCUREMENT STRATEGY COUNCIL PAGE 22
ESTABLISHING COMPREHENSIVE SUPPLIER QUALIFICATION PROCESSES

THE RESEARCH PROCESS IN BRIEF

Project Aims and Research Methodology

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.

Professional Services Note:


This project was researched and written to fulfill the specific request of a single member of the
Procurement Strategy Council and as a result may not satisfy the information needs of other
members. In its short answer research, the Procurement Strategy Council refrains from endorsing
or recommending a particular product, service or program in any respect, nor to provide an
exhaustive solution framework for the underlying problem. Sources are contacted at random within
the parameters set by the requesting member, and the resulting sample is rarely of statistically
significant size. That said, it is the goal of the Procurement Strategy Council to provide a balanced
review of the study topic within the parameters of this project. The Procurement Strategy Council
encourages members who have additional questions about this topic to assign research projects of
their own design.

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).

 2006 CORPORATE EXECUTIVE BOARD. ALL RIGHTS RESERVED.