Why and how you should manage your suppliers

​There’s no getting away from it - whichever ISO standard you look at, whether it’s the one for quality, the environment, health & safety, information security, etc - controlling your own supply chain is a major part of the requirements.

And with good reason. In all standards the delivery of your objectives, whatever they are, will undoubtedly rely on the competence, expertise and/or professionalism of a supplier somewhere along the line, from outsourced couriers to accountants.

Quality management, for example, addresses this with the concept of a chain - in this chain everyone in an organisation, no matter where they work in it, is considered a link, and the chain eventually leads to an external customer.

Put simply, if quality is maximised as a product or service moves along this chain, then ultimately the external customer will be satisfied. Changes in customers’ requirements should also be able to be communicated effectively backwards along the chain. These chains stretch back to suppliers, making their role key to the whole outcome of quality for an organisation.

So tor this concept to work in practice, good communications throughout an organisation - and its suppliers - are essential.

Another factor is that, as companies improve their own quality performance as a result of implementing a management system, attention will, eventually, naturally turn to its supply chain a source of ‘variation’ and therefore an opportunity for improvement (notwithstanding the fact that ISO 9001 mandates that organisations shall “determine and apply criteria for the evaluation, selection, monitoring of performance and re-evaluation” of suppliers). So how should this be done?

A practical approach to assuring quality in supply chains is one based on risk. That is, companies assess their supply base according to the risk they present to their end product or service, and apply resources accordingly.

In this scenario, critical suppliers warrant the deepest evaluation (e.g. strategy, processes, systems), monitoring (e.g. tailored key performance indicators) and the most focus on giving those suppliers support for their own improvement. At the other end of the spectrum, transactional suppliers (e.g. cleaners, bookkeepers, etc) only require high-level evaluation, exception monitoring and almost no improvement support.

The first stage to guarantee quality in your supply chain is to assess and approve suppliers on their capability to supply to requirements consistently. Yes, the first step in this stage is for procurement to accept the price range offered by the potential supplier - but then they should be subjected to a supplier qualification assessment. This should be assessing whether the potential supplier has the capability to supply to your requirements.

As an organisation you should consider several criteria when conducting the assessment depending on what it is you deliver to your own customers or clients and what their requirements are. Only through doing it this way do you know if you’ve got a ‘close fit’. 

The second stage is the monitoring and improvement of key suppliers. It is always better to plan and prioritise visits to key suppliers, spending more time with the ones that need more monitoring and development. It is also important to let the supplier’s management know what the monitoring and development consists of and how the supplier partnership should be conducted.

The best approach is to work with your suppliers to identify any weaknesses they might have, making sure that they understand and accept your findings, and to assist them in developing possible solutions for improvement.

In addition to better quality of outcomes, you’ll also find that you’ll get an improvement in productivity. This increase in productivity, efficiency and effectiveness will enable the supplier to offer competitive prices to you - so a win-win situation for both! You’ll find that those key suppliers that performed well will be rewarded with some of your increased share of the pie (so more purchase order for them).

And finally, a word about skills and competency in your supply chain. It’s worth noting that more established (usually larger) suppliers will have the resources to hire better staff and also send them out for training and development. Smaller suppliers are not always able to do this. 

However, the flip side is that you can often work more easily with smaller suppliers to identify weaknesses and indicate where they need improvement. If you can find a smaller supply who genuinely wants to work with you in a true partnership, this can be worth its weight in gold (so to speak).

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