7 Tips for Successful Supplier Management

Ten Principles of Supplier Development and Selection

1. The principle of system comprehensiveness: the establishment and use of a comprehensive system evaluation system.

2. Concise and scientific principles: supplier evaluation and selection steps, transparent, institutionalized and scientific selection process.

3. The principle of stable comparability: the evaluation system should operate stably, with unified standards and less subjective factors.

4. The principle of flexible operability: different industries, enterprises, product requirements, and supplier evaluations under different environments should be different, and a certain degree of flexible operability should be maintained.

5. The principle of door-to-door matching: the size and level of suppliers are comparable to those of buyers.

6. The principle of half ratio: the purchase quantity does not exceed 50% of the supplier’s production capacity, and the supplier who supplies the full amount is opposed. If only one supplier is responsible for 100% of the supply and 100% of the cost sharing, the buyer will be at greater risk, because once the supplier has a problem, according to the development of the “butterfly effect”, it will inevitably affect the normal operation of the entire supply chain. Not only that, buyers also need to consider geographical risks when they are dependent on certain supply materials or products.

7. The principle of quantity control of supply sources: the number of suppliers of similar materials is about 2~3, divided into primary and secondary suppliers. This can reduce management costs and improve management effects, and ensure the stability of supply.

8. Principles of supply chain strategy: develop supply chain strategic partnerships with important suppliers.

9. Learning and updating principles: The evaluation indicators, benchmarking objects, and evaluation tools and techniques all need to be constantly updated.

10. General principles – comprehensive, specific and objective principles: establish and use a comprehensive supplier comprehensive evaluation index system to make comprehensive, specific and objective evaluations of suppliers. Comprehensively consider the supplier’s performance, equipment management, human resource development, quality control, cost control, technology development, customer satisfaction, delivery agreement and other aspects that may affect the supply chain cooperation relationship.

Supplier Evaluation Main Control Points

1. Supplier screening and selection criteria.

2. Investigation of suppliers’ quality assurance capabilities.

3. Supplier’s sample quality appraisal.

4. Determine the content and steps of supplier evaluation.

5. Review and approval of supplier assessment conclusions.

6. Approval of Qualified Suppliers.

7. Establishment of qualified supplier files.

8. Regular supervision and assessment of the supply situation of qualified suppliers.

9. Carry out survival of the fittest or counseling according to the regular assessment of suppliers.

10. Supervision and handling of problems found.

Supplier development and assessment

Purchasing personnel usually evaluate suppliers in terms of price, quality, delivery volume and cooperation (service), and calculate the score in the form of a percentage system. As for how to allocate, each company can decide on its own according to the specific situation:

1. Price: According to the lowest price, highest price, average price, and self-assessment of similar materials in the market, a relatively standard and reasonable price is calculated.

2. Quality:

A. Approval rejection rate: judge the quality according to the approval rejection rate within a fixed period of time (such as one month, one quarter, half a year, one year). For example, in the first half of the year, a supplier delivered 50 batches and rejected 3 batches Second, the rejection rate=3÷50×100%=6%, the higher the rejection rate, the worse the quality and the lower the score.

B. Average pass rate: According to the pass rate of each delivery, calculate the average pass rate within a fixed time to determine the quality. For example, in January, a supplier delivered 3 times, and the pass rate is : 90%, 85%, 95%, then the average pass = (90% + 85% + 95%) ÷ 3 = 90%, the higher the pass rate, the better the quality and the higher the score.

C. Total pass rate: The quality is judged based on the total pass rate within a fixed period of time. For example, if a supplier divides 5 batches in the first quarter and delivers 10,000 pieces in total, and the total pass rate is 9850 pieces, then its pass rate = 9850÷1000×100% = 98.5%, the higher the pass rate, the better the quality and the higher the score.

3. Delivery volume:

Delivery rate = delivery quantity ÷ order quantity × 100%, the higher the delivery rate, the more points you get.

Overdue rate: = number of overdue batches ÷ number of delivery batches × 100%, the higher the overdue rate, the less points;

4. Cooperation degree (service): In terms of cooperation degree, appropriate points should be allocated. The better the service, the more points you will get.

Add the above three scores to get the total score, which is the final assessment score, so as to evaluate the supplier’s performance.

Method of selecting qualified suppliers

1. Evaluation of supplier’s production capacity.

2. On-site evaluation of the supplier’s quality assurance system.

3. Evaluation of product samples.

4. Compare the history of similar products.

5. Compare the inspection and test results of similar products.

6. Compare the experience of other users.

Ten Principles of Supplier Quality Management

1. Buyers can dispatch full-time staff to important suppliers, or conduct quality inspections on suppliers frequently.

2. Buyers regularly or irregularly conduct quality inspections or on-site inspections of the supplied goods.

3. Purchasers reduce their over-reliance on individual large suppliers and disperse procurement risks.

4. The buyer formulates the acceptance criteria for each purchased part and the acceptance handover procedures with the supplier.

5. For the selected suppliers, the company will sign a long-term supply cooperation agreement with them, in which the rights and obligations of both parties and the reciprocal conditions of both parties are specified in the agreement.

6. Buyers can set up SJQE at suppliers. SJQE can promote the quality of suppliers by playing the role of customers.

7. Buyers regularly or irregularly evaluate the grades of suppliers, formulate and implement reward and punishment measures.

8. Suppliers are re-evaluated every year, those who do not meet the requirements are eliminated, and qualified suppliers are added from the candidate team.

9. The purchaser conducts quality monitoring and management on the suppliers and upstream manufacturers of key materials.

10. The purchaser’s confirmation and approval are required to control the change of process parameters or design changes of supplier materials.

Online supplier quality network management

1. Effectively track the manufacturer’s improvement and implementation of bad problems.

2. The real-time dynamic interaction of quality information between buyers and suppliers can effectively achieve the purpose of PDCA cycle.

3. The paperless operations of both parties and the rapid search and generation of data charts save costs and achieve a win-win situation.

4. The purchaser can focus on controlling the incoming materials according to the quality status of the manufacturer’s production. Avoid indiscriminate shooting of birds and save human resources.

5. The data query is convenient and quick, no need to go through the supplier, and the data is true and reliable.

Supplier’s control method

The control of suppliers can be based on the size of the material purchase amount, and ABC classification is carried out on suppliers, which should be divided into key, general, and non-key suppliers, and then different controls are carried out according to the following methods according to different suppliers:

1. Send permanent representatives.

2. Regularly or irregularly go to the factory for supervision and inspection.

3. Set up supervision points to supervise and inspect key processes or special processes.

4. For the joint inspection of finished products, the customer and the purchasing personnel can go to the supplier to carry out joint inspection.

5. Suppliers are required to report major changes in production conditions or production methods in a timely manner (such as subcontracting and outsourcing, etc.).

6. Organize and manage technical personnel to provide guidance to suppliers so that they can improve their quality level and meet the company’s quality requirements.

7. The supplier shall provide relevant inspection records on process control.

8. Incoming inspection.

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