Before evaluating a current or potential supplier,
5 Key Factors to Consider
When Conducting a
Supplier Evaluation
Chris Feldsine  While supplier evaluation can be based on a number
 
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Supplier evaluation is largely founded on data.
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A strong supply chain is the backbone of a
successful business. Regardless of your industry,
close working relationships with your suppliers will
streamline production timelines, minimize operating
costs, and guarantee the quality of your products.
To buttress the supply chain and reinforce
relationships with suppliers, most companies
regularly evaluate their suppliers’ performance in
search of inefficiencies or possibilities for further
growth. These supplier evaluations are holistic
assessments grounded in verifiable quantitative
metrics and meaningful qualitative observations.
By examining a supplier’s capacities, technological
resources, delivery strategies, and general business
practices, you can ensure that your partners share
your priorities, and can then adjust their operations
to your company’s competitive benefit. In the
process, you can significantly reduce your own
risks, improve visibility at every stage of
operations, and create greater value for your
products and services.
What to Assess in a Supplier
Evaluation
Supplier evaluation is largely founded on data.
Therefore, this should be a carefully structured
process, centered on quantifiable performance
indicators such as delivery times, production costs,
and inventory levels. A standardized set of supplier
evaluation criteria provides a necessary frame of
reference with which you can assess a supplier’s
abilities and compare it with those of competitors.
however, a company must set clear expectations for
the relationship between them. At the outset, you
should clearly articulate your goals so that the
supplier fully understands the obligations involved
and can adjust operations accordingly if needed.
of factors, there are several considerations that
every company should address, regardless of the
specific industry. Some of these elements include:
1. Production Capacity
All supplier evaluations should thoroughly
appraise the supplier’s abilities and
limitations. A supplier that cannot scale
production in response to your production
cycles will not fare well in any review.
2. Quality
While it can be difficult to quantify the
quality of a product, this should always be a
central component of a supplier evaluation.
ISO BS/EN ISO 9001:2000 certification
remains the industry standard here, which
indicates that the supplier excels in
management responsibility, resource
management, product realization, and
measurement, analysis, and improvement.
3. Performance
Your company should ask as many
questions as needed to determine whether a
supplier can handle your typical functions.
Previous experiences with similar
companies, relevant recent projects, and
possible advances on current products or
processes are all valid subjects for
discussion.
4. Risk
Every business invariably confronts some
risks, but its suppliers should actively work
to minimize them throughout the supply
chain. Reviewing performance metrics such
as overall delays, average response time, and
corrective actions can help you develop a
reliable quantitative assessment of the risks
posed by a particular supplier.
5. Environmental Impact
Sustainability is an essential element of a
successful business for both financial and
ethical reasons. An evaluation should cover
a supplier’s waste management strategies,
waste reduction practices, and material
 procurement procedures, as well as efforts to The Value of Smart Supplier
achieve energy efficiency and any protocols
employed when handling harmful materials. Evaluations
How to Ensure a Successful Supplier evaluations serve as invaluable tools for
your business. By conducting them regularly, your
Supplier Evaluation company can gain greater insight into operations,
proactively identify opportunities for growth, lower
While many companies can easily identify the risks, streamline production timelines, eliminate
criteria needed for a supplier evaluation, it can be a unnecessary expenses, and bolster the performance
challenge to follow the practices needed to of your suppliers. These competitive benefits cannot
guarantee its success. The following guidelines can be overstated.
help your company retain its focus throughout your
evaluation. Although it should, of course, be comprehensive,
supplier evaluation doesn’t need to be difficult. By
 Outline a schedule. Clearly defining needed following the appropriate protocols, it can be a
tasks and establishing deadlines for them simple process for companies and suppliers alike,
ensures that everybody understands their allowing both to better understand their strengths
responsibilities and will work to complete and shortcomings, and encouraging both to work
them correctly and promptly. together to build a stronger, more prosperous
 Provide your suppliers with a concise yet partnership.
detailed questionnaire at the beginning of
the process. The questionnaire should
request both factual and subjective
responses, should only solicit necessary
information, and should not contain any
questions that the respondent cannot answer.
 Visit your supplier’s facilities. A personal
visit to your supplier can confirm the data
gained from the questionnaire while offering
insights into intangible aspects of the
supplier’s operations, such as workplace
culture. This also offers an opportunity to
review the supplier’s quality control
strategies, the current state of equipment,
and the workforce’s technical competence.
 Ensure that the right staff members are
participating in the evaluation. If you need
to evaluate the performance of a Level 1
supplier, for example, the chief financial or
revenue officer should probably be involved,
as well as senior members of the
procurement department.
 Be courteous to your supplier. A strong
working relationship with your supplier can
only heighten productivity. Don’t hesitate to
congratulate strong performers, and provide
less successful suppliers with a warning and
some guidance so that they can attempt to
resolve the issue before you end your
partnership.