What is supplier certification?

The supplier accreditation could be defined as a methodology that makes the right supplier available at the right time. This is very easy to say, but what do we mean by the right supplier and what is the right time?

A suitable supplier is one that at least meets the following parameters:

1.- It covers the needs adequately (in time and form).

2.- At a competitive price.

3.- With the required quality (according to the technical specification).

4.- It adds value.

We say at a competitive price and not at the best price on the market, because to secure the best, the best price on the market, we would have to ask for infinite offers from infinite suppliers. There would always be a supplier somewhere in the world with a better price.

But Purchasing is a means, not an end in itself, we have to be efficient and a good approval methodology allows us to select the right number of suppliers to ensure good offers in real competition.

And here we might ask ourselves:

What is the ideal number of suppliers in an organisation?

We may sometimes think that we should have had a larger number of suppliers, because we felt that we had few alternatives for some purchases. But if we increase, even double, the number of suppliers to the company, it is not a sufficient guarantee if we continue to do so in the same categories of purchases where there is sufficient market. It seems obvious, but it is not always noticed.

What is important is not so much the quantity of suppliers, but the quality of the suppliers and their distribution across the different purchasing categories.

This is why a good approval procedure requires the necessary structuring and distribution of suppliers by purchasing categories.

In terms of adding value, I need suppliers that not only do not create problems for me, but also add value.

Every supplier that scrupulously limits itself to the scope of the contract is a lost opportunity.

Having answered the question raised on the term suitable supplier, let us now turn to timing, i.e. the readiness of the supplier at the right time:

When we have a need on the table, it is not the best time to go out to the market to look for suppliers and get them approved. We have to work upstream of the need.

Supplier certification is a preventive and proactive activity, never reactive.

and much less to register the supplier, who has done the work without an order and must be registered in order to be able to assign an order to which an invoice can be charged, so that the supplier can be paid.

If we associate the evolutionary stages of the purchasing function with the human evolutionary chain, where would we put the colleague who asks us to approve the supplier in order to register an order for services performed so that the supplier can be paid?

To describe him as Homo Sapiens would offend his surname, perhaps: Neardental or Homo Erectus perhaps? Better as Homo Habilis, because he is very skilful at trying to score a goal.

The supplier approval process step by step

Supplier qualification is an essential process for companies seeking to ensure the quality, reliability and compliance of purchased products and services. As discussed above, this process involves evaluating and selecting suppliers according to established criteria to ensure that they comply with company standards and applicable legislation. Below, we detail the supplier approval process in different sections:

‍

Definition of criteria and requirements

Before beginning the approval process, the company must define the specific criteria and requirements that suppliers must meet. This may include product quality, delivery conditions, pricing policies, production capacity, environmental and safety standards, and regulatory compliance. These criteria should be aligned with the company's strategic objectives and values.

‍

Search and pre-selection of suppliers

This stage involves the identification and pre-selection of potential suppliers that can meet the established criteria. The search can be conducted through industry databases, recommendations, trade fairs or requests for information (RFI). A preliminary list of suppliers that can potentially meet the basic requirements is drawn up.

‍

3. Evaluation and audit

Pre-selected suppliers are subjected to a detailed evaluation process, which may include self-assessment questionnaires, analysis of documentation (certificates, quality policies, financial reports) and on-site audits. The purpose of this phase is to comprehensively verify the suppliers' compliance with the defined criteria. Audits are used to evaluate the supplier's facilities, production processes, labor practices and environmental policies.

‍

4. Negotiation and contractual agreement

Once a supplier has been positively evaluated, terms and conditions are negotiated. This includes pricing, delivery terms, payment terms, warranties and service level agreements (SLAs). It is critical that these agreements are clearly documented and that both parties agree to the terms.

‍

5. Integration and development

Integrating the new supplier into the company's supply chain is a crucial step. This may require coordination with various departments within the company, such as logistics, quality and production. In addition, it may be beneficial to develop a long-term relationship with the supplier to foster continuous improvement and innovation.

‍

6. Continuous monitoring and evaluation

The approval of a supplier does not end with the signing of a contract, it requires continuous monitoring and evaluation to ensure that the agreed performance levels are maintained. This involves periodically reviewing key performance indicators (KPIs), conducting follow-up audits and assessing customer satisfaction.

‍

The supplier approval process is a continuous cycle that involves the pre-selection, evaluation, negotiation and monitoring of suppliers to ensure that they meet the company's quality and performance standards. This process helps to minimize risk, ensure product and service quality, and foster beneficial, long-term relationships with suppliers.

The advantages of having software for supplier certification

Working with specific technology to approve suppliers offers multiple advantages for companies. Firstly, it improves the efficiency of the approval process, automating tasks such as document collection, supplier response evaluation and audit follow-up, thus reducing the time and resources required.

In addition, specific technology ensures greater consistency and objectivity in supplier evaluation. By using standardized systems and predefined criteria, companies can minimize bias and ensure that all suppliers are evaluated fairly and uniformly.

Another important advantage is the improvement in data management and decision making. Technological platforms make it possible to store and analyze large volumes of information, providing fast and secure access to the data needed to make decisions on supplier selection.

These tools encourage transparency and collaboration between the company and its suppliers. By sharing criteria, results and feedback in a clear and accessible way, a stronger and more cooperative relationship can be built, contributing to continuous improvement and joint development. 

Specific technology for supplier certification can transform a complex and labor-intensive process into a more efficient, fair and strategic one.

What type of companies can incorporate a supplier approval process?

All companies, regardless of their size, sector or activity, can incorporate a supplier qualification process. From small companies to large corporations, all can benefit from establishing clear and systematic criteria to evaluate and select their suppliers. 

Approval ensures that suppliers meet the required standards of quality, safety and social and environmental responsibility, which in turn improves the quality of the final product, minimizes operational risks and strengthens the supply chain. 

In short, any company that relies on suppliers to operate effectively can and should consider implementing a supplier qualification process.

‍

Hilario López Cano

Director of Supplier Evaluation and Development Dokify

‍