SCOR Best Practice: Supplier Appraisal

Supplier Appraisal is a systematic process that helps organizations identify and assess suppliers based on their ability to meet requirements and deliver value. This practice forms the backbone of effective strategic sourcing and supplier management.

What is Supplier Appraisal?

Supplier appraisal is the process of evaluating a supplier’s ability to meet the organization’s needs and requirements. It involves a thorough assessment of various factors such as quality, price, lead times, capacity, financial stability, and adherence to industry standards. The goal is to ensure that the supplier is capable of delivering consistently, on time, and at an acceptable cost.

A few key questions to consider during supplier appraisal include:

• Is the supplier capable of delivering the required products or services?
• Does the supplier have the capacity to meet demand?
• What is the supplier’s performance history?
• Are the supplier’s prices competitive?
• How financially stable is the supplier?

The 10 C’s of Supplier Appraisal

A commonly used framework for supplier appraisal is the 10 C’s of Supplier Appraisal, developed by Ray Carter. This checklist helps organizations assess suppliers based on 10 key capabilities:

1. Competency: Can the supplier provide the required products or services?
2. Capacity: Does the supplier have the resources to meet your demand?
3. Consistency: Is the supplier reliable in meeting delivery deadlines and maintaining quality?
4. Control of Process: Does the supplier have robust quality control systems in place?
5. Cost/Price: Are the supplier’s prices competitive and fair for the value they deliver?
6. Commitment to Quality: Does the supplier maintain a strong focus on quality assurance?
7. Cash/Finances: Is the supplier financially stable enough to ensure long-term reliability?
8. Clean: Does the supplier follow environmentally sustainable practices?
9. Culture and Relationships: Does the supplier’s organizational culture align with your company’s values?
10. Communication: How well does the supplier communicate with your team?

Why Supplier Appraisal Matters

Supplier appraisal is essential for several reasons:

1. Risk Mitigation: By thoroughly assessing a supplier’s capabilities and stability, businesses can reduce the risk of supply chain disruptions.
2. Cost Efficiency: Evaluating suppliers based on pricing and financial health ensures that the organization gets value for money without sacrificing quality.
3. Improved Supplier Relationships: The appraisal process promotes open communication and transparency, leading to stronger, more collaborative relationships with suppliers.
4. Sustainability and Compliance: Supplier appraisal ensures that suppliers align with your organization’s sustainability and compliance requirements, which are increasingly important in today’s global supply chains.

The Supplier Appraisal Process

To conduct a successful supplier appraisal, companies can use a variety of methods, including:

• Questionnaires and RFI (Request for Information): Asking suppliers to provide detailed information about their capabilities.
• Desktop Research: Conducting research on the supplier’s reputation, financial health, and performance.
• Field Research and Site Visits: Visiting the supplier’s facilities to assess their operations.
• Reference Checks: Speaking to other clients to get feedback on the supplier’s performance.

Key Metrics to Track

Once the supplier appraisal process is complete, tracking key metrics helps ensure ongoing performance and improvement. These include:

• Perfect Supplier Order Fulfillment: Ensuring that orders are delivered in full and on time.
• Source Cycle Time: The time it takes from sourcing to receiving the product.
• Inventory and Energy Usage: Evaluating the supplier’s sustainability practices in areas such as materials used and energy consumption.
• GHG Emissions and Water Consumption: Tracking environmental impact metrics, which are crucial for long-term sustainability goals.

Conclusion

Supplier appraisal is a vital practice for businesses aiming to secure reliable and competitive suppliers. By following a structured evaluation process and using frameworks like the 10 C’s, organizations can build stronger supply chains that are resilient, cost-effective, and sustainable.

By ensuring that suppliers meet both operational and ethical standards, companies not only safeguard their supply chain but also contribute to broader goals like environmental sustainability and corporate social responsibility.