These days, the sheer volume of tasks SMEs undertake just to ensure their survival is phenomenal. It’s very tempting to cut corners and cut back on these mandatory activities. Some companies, when attacking business processes, often neglect the very important evaluation of their suppliers, which reduces the commercial reviews and evaluations of suppliers, particularly when their performance appears, at first glance, to be satisfactory.
Supplier risks
Businesses typically depend on the ability of their suppliers to ensure a continuous and timely flow of materials. Maintaining this flow of parts is one of the main reasons that suppliers are evaluated, to help eliminate business risks.
The continuous flow of supplies is affected by many factors such as the environment, raw materials, cash position, etc. So when companies become dependent, supplier risks are concerns they must address. No supplier can claim zero risk, it simply does not exist, but proper and ongoing assessment of supplier performance will keep that risk under control. Assessment through close communication can help identify potential risks, which can be managed or addressed. Neglecting this assessment can result in the organization only realizing the extent of the risks when the problem is already present and its corrective actions will not change the fact that its business has already suffered.
Minimize defects
The evaluation process also creates a space to communicate your needs, thus improving your knowledge of your suppliers and making your production better suited to your business. Appraisal activity leads to supplies with fewer imperfections, as brainstorming helps suppliers better understand your requirements and gives you time to discuss and review any production issues that may arise.
Improved coordination
This process not only manages risk, it can also improve the efficiency of your business. The evaluation creates better coordination between the two of you. Proper evaluation of the production process can result in clearly planned production schedules or timelines, especially when your demand profile is variable. Giving them a good picture of your requirements will help them do the planning and scheduling necessary to meet your demands. The supplier, in turn, has the opportunity to learn about your operations and therefore gives you the opportunity to eliminate all your problems and concerns, making you a more efficient supplier.
This coordination between customer and supplier gives you a better chance of achieving your goals.
During the evaluation process, buyers and suppliers have the opportunity to work as a team, which will definitely produce better results than working separately. This coordination will also lead to the alignment and integration of processes between the customer and the supplier with a more consolidated working relationship as a result.
Evaluation process as an incentive to suppliers
The evaluation process can also act as a suitable place for suppliers to present the innovation. The evaluation itself can act as an incentive for providers to be more creative. Unlike the old days where vendors are dominated by the customer (“I want what you provide but for 25% less”), evaluations are no longer used for the purpose of hitting vendors, but as a way to solve problems and launch development or improvement activities.
Better paperwork
This process also gives providers the time to resolve administrative issues. Invoices and delivery receipt are just some of the concerns that management can correct, making the evaluation process more efficient.
Evaluation process: to maintain your competitive advantage
The evaluation process can serve as a tool for three important purposes necessary to improve the relationship: one manages risk; two, it minimizes faulty supplies by solving problems that can arise in the supply chain, and three, it creates an environment that improves efficiency and generates savings.
