Identifying new suppliers to work with is always a hard decision to make. Even the combination of a recommendation from an industry colleague, and the supplier’s ability to showcase their capability, isn’t enough to make you sure that the new partnership will be successful.
While many companies take a calculated risk by appointing a new supplier, unsure whether problems will occur further down the line; there is a three-step framework that can help companies better appoint new suppliers – and ensure they are meeting standards long into the future.
The Altius supply chain performance framework is a great tool that pins new, and existing suppliers too, down to three key areas: capability, management and monitoring. Here we give a brief explanation of the framework and how it can help you.
Judging the capability of your suppliers gives your business a clear indication of their skills and experience. Failure to do this could result in you employing a company that cannot maintain the high quality of service you expect, putting your company and supply chain in danger of falling below standards.
To judge supplier capability effectively, you should:
The job of managing compliance extends well beyond the basics of information and evidence gathering for authorisation to work. Ongoing management of suppliers is required to ensure that contractual compliance is adhered to. For new and existing suppliers, you should be giving them the relevant policy, rules and specifications to help them stay compliant. Your job at this stage is to monitor that they are doing this correctly and on time.
To manage new suppliers effectively, you should:
To ensure that your supplier abides by your contractual agreements and meets their targets, you need to have a system in place so that you can monitor their progress continually. This can be in the form of an audit which will assist in identifying areas for improvement; it can also assess the performance of your suppliers, which is crucial to maintaining high standards.
To monitor and evaluate the performance of a new supplier, you should:
Managing new and existing suppliers effectively is hard to balance, so here is a three-step framework to help you effectively evaluate new suppliers.
For more advice on managing new suppliers, take a look at our Introduction to Supply Chain Compliance Best Practice here.