Carter's 10 Cs of Supplier Evaluation

Making the right choice of supplier for any part of your organization is critical. Get it right, and you
can build a lasting, mutually beneficial relationship. Get it wrong, and the results can be both costly
and disruptive.

You might find a supplier that offers a good price, but later realize that the quality of their products
do not meet your expectations. Or maybe they don't keep you up to date with the progress of your
orders.

Mismatches between your procurement needs and what a supplier offers can add costs, cause
delays, and even damage your organization's reputation – for example, if the equipment or
resources supplied are substandard.

How to use the 10 Cs of Supplier Evaluation to identify your organization's

needs, understand how suppliers can meet them, and choose the right supplier
for you.
Defining The 10 Cs

Dr Ray Carter, director of DPSS Consultants, first outlined his Seven Cs of

Supplier Evaluation in a 1995 article in the Journal of Purchasing and Supply
Management. He later added three new Cs to the model.

The 10 Cs are criteria for assessing the suitability of a potential supplier. Use
them as a checklist when deciding who to approach, and who to avoid. They are:

1. Competency.
2. Capacity.
3. Commitment.
4. Control.
5. Cash.
6. Cost.
7. Consistency.
8. Culture.
9. Clean.
10.Communication.
Carter's 10 Cs can form the basis for a strong procurement management policy.
They help you to evaluate potential suppliers in the areas that matter to you, and
can greatly improve your supply chain management. 

First, you can use the 10 Cs to analyse different aspects of a supplier's business:
examining all 10 elements will give you a broad understanding of the supplier's
effectiveness and ability to deliver.

In the following sections, we look at how you can apply Carter's 10 Cs model to
find the supplier that will best fit your organization's needs and values.

1. Competency

Competency is defined as having the skills or capability to enable you to do something

successfully.
In terms of a supplier, there may be a variety of competencies that need to be assessed;
such as:

 Planning
 Logistics
 Supply-Chain
 Manufacturing capabilities
 Organization
Where there are critical competency requirements, it will be important to gather evidence,
perhaps in the form of references from other customers, in order to highlight areas of risk.  
Assessing competencies requires careful consideration, namely:

 What competencies does your organization require its supplier to demonstrate (this
may stretch beyond the simple supply of parts)
 How will these competencies be assessed?
 How will you ensure that your evaluation method provides an accurate picture?

(First, look at how competent the supplier is. Make a thorough assessment of
their capabilities, and measure them against your needs. Then look at what other
customers think. How happy are they with the supplier? Have they encountered
any problems? And find out why former customers changed supplier.

Look for customers whose needs and values are similar to yours, to ensure that
the information you gather is relevant to your organization.)

2. Capacity
Capacity could be 

 People
 Raw material
 Machinery
 3rd Party Suppliers
 Logistics, etc
The intended supplier needs to demonstrate sufficient capacity to deliver your order book
and suitable processes that provide capacity management. For example:

 Do they have peak times?  

 Can they offer surge capacity?  
 What happens if another customer requires a large volume of capacity?  
 How then do they manage their other customers (which could be you!).
 Does the supplier have the means to adequately supply what you need while also
servicing other customers?
One way of assessing capacity is to have a deep understanding of what resources are
required to make the goods/services you’ll be buying.  

(The supplier needs to have enough capacity to handle your company's

requirements. So, ask how quickly they will be able to respond to your needs,
and to market and supply fluctuations.

Look at the supplier's resources, too. Do they have the means to meet your
orders, taking into account their commitments to other clients? (These resources
could include staff, equipment, storage, and available materials.))

3. Commitment

Your prospective supplier needs to demonstrate that they have a commitment to you as a
potential customer and not just at the start of the relationship (where you want to part with
your beloved purchase order!).
Examine how you will sustain your relationship; why does the supplier want to do business
with you? What investment are they making? How cognisant of your goals are they, and
what are they prepared to do to support you?

(Your supplier needs to provide evidence that they are committed to high
quality standards. Where appropriate, look for quality initiatives within the
organization, such as ISO 9001 or Six Sigma.
The supplier must also show they will be committed to you, as a customer,
throughout the time that you expect to work together. (This is particularly
important if you're planning a long-term relationship with them.)

Look for evidence of their ongoing commitment to fulfilling your requirements,

whatever the needs of their other customers.)

4. Control

Control relates to their ability to control their own internal drivers to achieve your order.  
For example, how will they sustain Quality? Whilst it’s straightforward to review
certification like ISO9001, utilizing it is another thing altogether, and understanding how the
supplier will deliver quality is key to understanding their ability to exert control over their
processes.
One aspect to thoroughly investigate is where parts or information cross boundaries (i.e.,
from your supplier to one of their suppliers). How is this controlled? A supplier’s supply-
chain management can be life or death in terms of their ability to meet Cost, Quality, and
Delivery drivers. 

(Ask how much control this supplier has over their policies, processes,
procedures, and supply chain. How will they ensure that they deliver
consistently and reliably, especially if they rely on scarce resources, and if these
resources are controlled by another organization.)

5. Cash

They could be:

 Lack of cash
 A poor credit history may impact the ability to buy materials
 Assets vs. liabilities
 Dependency on a small number of key customers (or one big customer).

In these situations, you need to determine what’s critical and gather data around that. For
an organization with many suppliers, it may not be practical to do them all in-house, and
many organizations may utilize 3rd party assessment tools.

(Your supplier should be in good financial health. Cash-positive firms are in a

much better position to weather economic ups and downs.
So, does this supplier have plenty of cash at hand, or are they overextended
financially? And what information can the supplier offer to demonstrate their
ongoing financial strength?)

6. Cost

Cost is one of the more common assessments; how much does the service/product that you
are looking to procure cost.
For many outside of the Supply Chain, they may consider this as the key aspect to assess;
however, several other areas help establish a potential supplier’s robustness, and it’s
arguable that cost is now not as important as for example, establishing risk around the
supplier.
A suppliers cost is likely to be made up from a number of different areas such as the chart
below. The supplier will need to demonstrate control over all of these.
While it may seem relatively simple to assess cost, there is often more to it than initially
thought. Cost assessments are likely to include:

 Batch breaks
 The validity of pricing (how long a price will be maintained)
 Historical pricing with supplier
 Key cost drivers and how the supplier is able to influence them
 Discounts (for example, obtained by early payment of invoice )

(Look at the cost of the product or service that this supplier provides. How does
it compare with the other options that you're considering?
Most people consider cost to be a key factor when choosing a supplier.
However, cost is in the middle of the 10 Cs list for a reason. Other factors, such
as a commitment to quality and financial health, can potentially affect your
business much more than cost alone, particularly if you plan to rely on the
supplier long-term.)

7. Consistency

So you have a supplier that has the capability, the capacity, and the right financial structure
to support you. The question is will they do it repeatedly and to the desired standard.
One of the most common issues is that you have a supplier that might look great, they pass
all the tests, and you add them to your approved supplier’s list.  
Your first few deliveries go like a dream, but then standards and performance start to drop
as they move on to support new customers.
Consistency is one of those tough nuts to crack; just how do you assess a supplier to ensure
that they can perform over the longer term.
This is covered by two steps

 Step 1 – Seek evidence behind their track record

 Step 2 – Review their infrastructure (processes and tools) that can drive
performance 
 Step 3 – Assess investment being made, examining how this will help sustain the
company over the long term.

(How will this supplier ensure that they consistently provide high quality goods
or services? Do they have a strong track record, or are they an industry
newcomer with an innovative approach?

No one can be perfect all the time. However, the supplier should have processes
or procedures in place to ensure consistency. Ask potential suppliers about their
approach, and, if possible, get a demonstration and a test product.)

8. Culture

Procurement experts should also assess an organization’s culture looking for close
alignment with the buying organization.
Harmonious cultures can drive closer, more collaborative relationships.

(The best business relationships are based on closely matching workplace

values. This is why looking at the supplier's business culture is important. For
example, what if your organization's most important value is quality, and your
main supplier cares more about meeting deadlines? This mismatch could mean
that they are willing to cut corners in a way that could be unacceptable to you.

Look out for suppliers that have received recognition within the industry for
their cultural excellence, and use the Cultural Web to help identify the
organization's values.)

9. Clean
Carter argues that we should also place emphasis on a supplier’s engagement with issues
such as sustainability and corporate responsibility.
As part of our evaluation process, we should assess associated credentials and evidence that
demonstrate an ethical business approach.

(This refers to the supplier's commitment to sustainability, and their adherence

to environmental laws and best practices. What are they doing to reduce their
environmental footprint? Ask to see evidence of any green accolades or
credentials they have earned.

Also, does this supplier treat their people – and the people around them – well?
Do they have a reputation for Corporate Social Responsibility, and for doing
business ethically?)

10. Communication

The final C is a critical one. Communication

We should be evaluating suppliers’ methods and processes for communicating with the
buying organization (and it’s own stakeholders).
We should evaluate:

 Communication methods
 Frequency of communication
 Key Points of contact
 Issue Identification & Resolution
 Escalation routes
Communication is a key facilitator that drives effectiveness and efficiency. Without it, issues
can arise, and performance can be affected.

(Find out how the supplier plans to keep in touch with you. Will their proposed
communication approaches align with your preferred methods? And who will be
your contact at this firm?

It's also important to find out how the supplier will handle communications in
the event of a crisis. How quickly will they notify you if there's a supply
disruption? How will that communication take place? And will you be able to
reach senior people, if you need to?
Communication is particularly important if you're managing day-to-day
functions that you outsource, or if you're dealing
with freelancers or consultants who provide core services.)