Supplier evaluation methods

Establishing reliable supplier evaluation methods, which provide us with concrete data about their activity, is essential. Using specific tools, we can measure the activity of different suppliers, evaluating their performance and profitability. 

Why should suppliers be evaluated?

Evaluating and approving suppliers is crucial to ensure the quality and reliability of the products and services supplied. Proper evaluation helps to identify suppliers that meet the required standards and have the capacity to deliver on time, reducing the risk of interruptions in the supply chain. It also helps ensure that costs are competitive and that suppliers comply with relevant standards and regulations. It is also critical to building strong, collaborative, long-term relationships, fostering continuous improvement and innovative solutions. Ultimately, rigorous supplier evaluation contributes to operational efficiency, customer satisfaction and business sustainability.

How supplier evaluation is performed

A complete supplier evaluation is based on at least five criteria that must be analyzed in depth. 

General supplier information

Gathering general information about the supplier is the first step. This includes details about the company such as its history, organizational structure, location, and industry experience. The supplier's financial stability should be verified through financial statements and credit analysis. In addition, it is essential to know its reputation in the market, which involves consulting references from other clients and opinions or success stories. Another important consideration is the supplier's ability to comply with relevant standards and regulations, including quality certifications and legal compliance. This information provides a comprehensive view of the supplier's suitability as a business partner.

Value for money 

Evaluating value for money involves analyzing whether the products or services offered by the supplier justify their cost. This is not limited to obtaining the lowest price, but rather the best combination of cost, quality and service. The quotations received should be compared with market prices and the payment terms and commercial conditions should be evaluated. It is essential to consider not only the initial price, but also long-term costs, such as maintenance, after-sales support and product life. Value for money is best assessed in a broad context, considering both tangible and intangible benefits, such as supplier reliability and innovativeness.

Technical capacity

The supplier's technical capability is crucial to ensure that it can meet the specific requirements of the product or service. This assessment includes a review of its production processes, the technology it uses and the technical competencies of its personnel. It is advisable to conduct audits or visits to the supplier's facilities to directly assess its technical capabilities. In addition, it is useful to review previous cases or similar projects to determine their level of experience. Technical capability can also be measured through industry certifications, such as ISO, which ensure that the supplier follows recognized standards of quality and efficiency.

Infrastructure and technology capacity

The supplier's infrastructure and technology are key determinants of its ability to deliver products or services efficiently and on time. The evaluation should include a review of its physical facilities, equipment and information technology. A supplier with modern infrastructure and advanced technology is likely to be more efficient and have a lower risk of operational failure, and it is important to assess their logistical capabilities, including how they manage warehousing, inventory and distribution. Infrastructure and technology capacity can also be assessed by considering their flexibility to adapt to changes in demand and their ability to scale operations as needed.

Evaluate the quality of service

Service quality is assessed through several key indicators, such as on-time delivery, order accuracy and customer service efficiency. Metrics such as response time, defect rate and customer satisfaction can be used to measure service quality. It is useful to obtain direct feedback from end users of products or services to identify areas for improvement. In addition, it is important to assess the supplier's ability to solve problems efficiently and its willingness to collaborate on continuous improvements. Service quality also includes the ability to offer technical support and training, which can be crucial for the optimal use of the products or services provided.

When should the supplier evaluation be performed?

Supplier evaluation should be a continuous process, beginning prior to contracting and extending throughout the entire business relationship. It is advisable to conduct a thorough evaluation during supplier selection, to ensure that they meet the necessary requirements and standards, a continuous evaluation is essential to monitor the supplier's capability, ensuring that they maintain quality, meet deadlines and adapt to specific business needs. 

Regular evaluations identify areas for improvement, manage risks and foster effective collaboration. This practice ensures that suppliers remain profitable partners and contribute to the sustainable success of the company.

In Dokify we have developed a supplier evaluation tool, with which you have the possibility to digitize the complete information and have reliable data in real time.