Jun
2
What To Appraise When Carrying Out A Supplier Appraisal
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Carrying out any supplier appraisal is important so that you can establish what they can offer in terms of capability and competency. Although there are standard supplier appraisal forms available, these are not necessarily a good idea; they can only offer very generic appraisals.
What matters within the supplier appraisal is what is important for your business and that means that you first need to draw up schedule of the priorities for your business and then incorporate these into a supplier appraisal form. However, there are some issues that should be considered and where appropriate, incorporated into any supplier appraisal.
General Information
The general information section should include questions that are fairly straightforward. These ask the supplier to give details of who they are, where they operate, what kind of status their business has. For example, are they a sole trader, a limited partnership, a public limited by guarantee etc?
This section will also cover any business registration numbers, the main address of the company and so on.
It is usual standard practice to include some questions about the size of the operation, the main areas of supply or production, methods used to supply items etc. These include questions about what methods are used to assure delivery schedules etc. This is a slightly different area from quality, it is about the practical framework that the company uses to ensure that it can meet its targets for delivery. It is appropriate to ask about performance here, including % rates for meeting targets.
Legal and Financial Information
Legal and financial information may be tedious, but it is necessary to ensure that in legal terms the company is able to contract with you! It is also important to ascertain whether the supplier is financially viable, because if they are not then you will be wise to avoid using them as a supplier!
There may be some particular legal of financial information that your specific business has to include and it should be included here, as opposed to within the quality section. For example, if you need suppliers to have licences to deal with hazardous materials, or to be able to comply with environmental health regulations, then this is the place to ask for any such details.
Quality
Quality is important because it will provide you with the opportunity to gain a full picture of the supplier and what they are able to offer you.
With regard to very large contracts it is entirely acceptable to ask all sorts of questions about performance.
You may need to know what certification (ISO for example) the supplier holds.
Usually there will be a sub-section here which asks for referees, whom you should contact to discuss the supplier’s performance. Questions here should ask about the nature of the contract and how much it was worth and if it is still in place; if not, it is acceptable to seek clarification as to why it has ended.
Quality should also focus on what detailed internal mechanisms are in place to ensure that quality is assured. For example, how do they deal with any item becoming obsolete? How will they tell you? What is their rate of returns, defective items etc?
Sometimes the questions can seem almost impertinent, but the more questions you ask, the better the profile of potential suppliers will be, so ask as many questions as you feel appropriate. But always remember that what is important to you should be included, not what you think you should be asking. This is an important issue and it is too important to get it wrong, so spend time thinking about your priorities and then drafting the appraisal form after much consideration!
Jun
1
What Is The Role Of A Commodity Manager?
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Commodity management is becoming an increasingly important role within the supply chain community as more and more companies attempt to secure their supplier lines, deliver value for money and develop structured relationships with key suppliers. Although a commodity manager has a clear managerial role within the process, it is the context that the manager operates in as a whole that is significant.
What Is A Commodity?
A commodity is something that is fixed in the sense that it is basically the same, no matter who supplies it.
Common commodities that we are all familiar with include petrol, gas, wheat, coffee (to a large extent), gold and of course, oil, but in effect there are many more.
Commodities Market
Commodity management requires a very strategic and robust plan to ensure that both value and risk is managed correctly. Commodity management is in effect a thorough and systematic approach to the usage cycle for any specific group of items. The commodity manager has to look at how a company buys and the patterns of purchasing commodities, then has to ascertain the market forces that apply to the commodity.
So commodity management is about more than simply ‘managing’ commodities or procurement. It is essentially about mitigating the risks within the market whilst running an effective sourcing campaign.
Commodities Management And Procurement
Often the role of procurement manager and commodities manager are very closely interlinked and very often the two roles are combined, so that the person who is responsible for procurement will also be responsible for commodity management. So job descriptions often combine the two roles into one very senior person(s) within the company.
The commodity manager also has to liaise with suppliers to ensure that the supply chain is as stable as possible, so that there is no risk of the supply chain breaking down. Although traditionally this is the role of procurement, this fits in well with the role of the commodity manager.
Thus the role of a commodity manager is extremely complex and it has to be undertaken by someone who is capable of understanding markets, the supply chain, how the business works and so on. It is about far more than simply ‘managing commodities’ it is about mitigating risks, making sure the company survives extreme volatility in commodities and about integrating all the different roles within a company.