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The External Provider Evaluation Procedure defines the criteria and methods for selecting and evaluating vendors for addition to or disqualification from your company’s approved vendor list.
This procedure applies to all vendors of products, materials, and services that directly affect the quality of your company’s products/services. (18 pages, 2381 words)
The Procurement Manager is responsible for initial vendor identification and for collection of business information related to the potential vendor. The Procurement Manager is also responsible for maintaining vendor performance data for ongoing evaluation.
The Accounting Manager is responsible for evaluation of potential vendors’ financial information.
The Quality Assurance Manager is responsible for evaluating vendors’ quality systems as appropriate and for reporting vendor quality performance.
Critical external provider – an organization that produces processes, products, and services that must conform to requirements. Contrast that with a non-critical external provider of commodities (e.g., office supplies) where quality is not as critical, tolerances can be fairly wide, and there are commonly available alternatives.
Certificate of Conformance – Is issued by an external provider certifying the item was made in accordance with required specifications. It may include test results or process specifications.
ISO-certified external provider – an organization that has demonstrated (or can demonstrate) that its processes conform to ISO 9001 and has implemented a system of continual improvement.
Provisional approval – Partial approval, usually granted by a customer to an external provider, pending correction of specified deficiencies.
Qualification approval – Approval given a part, component, or material that has been evaluated against a standard and approved.
External provider – an organization that provides processes, products, or services that are intended for incorporation into the organization’s own products and services, provided directly to the customer on behalf of the organization, or a process or part of a process is provided as a result of a decision by the organization
Great supplier relationships are built on more than price, they are built on delivering to the customer what the customer wants. How do you build your supplier relationships?
In a May Issue of a local restaurant and cooking magazine, the featured article was about the important relationships some of our city’s best chefs have with local farmers and growers.
In the half-dozen great supplier relationships profiled, rarely does the topic touch on price (and when price is mentioned, it focuses on the great value). The emphasis is on other features: freshness, taste, quality, variety, shared attitudes.
These chefs know their customers. The chefs understand that people come to their restaurant because they want a great dining experience, not because they want to save a dollar or two on a meal. The chefs know the importance of having great local suppliers in order to deliver that great dining experience.
Any business that uses suppliers can take a lesson from this. Too often a business focuses heavily on unit price from their suppliers, and they forget to focus on total cost, relationships, and even more importantly, how choosing competitive suppliers impacts their customers.
Are you really saving money if you select a supplier based on unit cost, but shipments are late, parts are defective, or they require constant hand-holding to understand specifications or other criteria?
The union shop across town may not be able to compete with a third-world supplier on a unit price basis, but it you account for the total cost of ownership of foreign suppliers (i.e. of testing and dealing with defective materials, extra inventory or production delays because shipments are traveling halfway around the world, the personal relationship and convenience of dealing with a local supplier), you may be saving money in the long run if the local supplier consistently delivers quality parts on time with little or no oversight.
Plus, if supplier problems causes you to lose a customer, how much have you really saved?
Great supplier relationships are built on delivering to the customer what the customer wants based on quality, timely delivery, and value. How valuable are your suppliers to your customers?