Supplier evaluation is the process of analysing potential suppliers and existing ones so that you have the best suppliers for your business. Choosing the right suppliers is essential; working with good suppliers can reward the business with an array of benefits, whereas choosing the wrong ones can damage it. Below we look at the many other reasons why it’s so vital to engage in a supplier evaluation process.
Alignment of best interests for both parties
Both parties should understand and acknowledge the timelines, deliverables and critical requirements of the project. Good alignment is indispensable so that you can move forward. If you’re well aligned, you’ll be sharp in the job, and the supplier will be sharp at providing the right quality goods or services. It’s a win on both sides.
Clear communication of expectations
Evaluation allows you to clarify what you need from your suppliers and communicate it to them clearly, which builds trust and transparency. Fostering this is important because if your suppliers understand what you need, they can deliver the best quality for you. The effective communication and clear direction also means they’ll be likely to respond better to future innovation in products and processes. This creates more efficiency and progress.
Improvement in supplier quality
This isn’t just about the quality of the product and the service, but about the overall experience of working with the supplier. Are you tracking communication? Are you tracking how responsive they are to issues from your side? It’s important to make records of these so you can decide whether the business relationship is worth your time and effort. Keeping a record of their actions all in one place will help you when it comes to discussions with them about the positive and negative aspects of the working relationship.
Elimination of unnecessary costs
Evaluating suppliers gives you extra insight into your costs. Note that costs not only depend on supplier product quality, but also on their operations. If a supplier delivers goods late or the goods are constantly damaged, this affects your costs and can cause you to miss out on sales to your own customers.
Identification of new business opportunities
Evaluating suppliers, whether you’re doing it via on-site visits, via questionnaires, interviews or other methods, creates scope to communicate with different people in the supplier’s business. This opens up more windows to potential new business opportunities.
Risk mitigation
A careful evaluation of suppliers allows you to lower regulatory, legal and financial risk factors that come with working with a system outside of your business. The further the geographical distance, the greater the risk can become. You must also contend with the risk of lower tier suppliers, which can become a challenge. Evaluating suppliers enables you to mitigate risk and devise strategies to counter it.
Better supplier relationships
Evaluating your suppliers allows you to manage them better and build stronger relationships with them. Greater collaboration, communication and loyalty can all stem from good supplier management. These factors then pave the way for mutually beneficial working relationships with suppliers.
Better supplier performance
One of the main aims of supplier evaluation, if not the main aim itself, is to improve supplier performance. Measuring supplier performance can have an impact, but supplier evaluation can generate ongoing improvement. Using the right evaluation methods, you can analyse quality, cost management, delivery and other aspects of supplier performance. Your suppliers can then come up with corrective measures to enhance performance.
Supplier evaluation is crucial to protect your business from the damage that choosing the wrong supplier can inflict upon it — and to reward your business with the benefits that choosing the right ones can bring to it. Are you having trouble trying to gauge which suppliers would be right for you? We offer a variety of services to help you get the most out of your procurement. Contact us, and we’ll be happy to discuss the right service for your project and bring our expertise to your procurement.
