Why should I approve my suppliers?

Ask yourself the following question. When you go on Amazon or Aliexpress to buy a sweatshirt, you usually look at the pictures, read the features and buy the cheapest one.

Sometimes you get it right and sometimes, when you open the box... you close it and send it back. At best, you put a comment.

What's going wrong here? Well, we don't know who we are buying from. We do not have much information if it is a responsible and reliable supplier, if it is a Chinese distributor of dubious reputation or an individual who buys on Aliexpress very cheap and sells on Amazon more expensive.

Logically, a private individual is not going to get into the trouble of approving the suppliers from whom he buys. But a company must do so.

The importance of supplier certification

The approval of a supplier does not entail a purchase obligation on the part of the company, but rather indicates that the supplier is properly qualified and accredited to supply products. 

Through the supplier approval process, we seek to establish a list of approved suppliers that meet the company's needs. However, this approval does not imply an exclusive procurement commitment with that supplier. The company has the flexibility to choose from among the approved suppliers according to its specific requirements and commercial conditions.

How can I approve my suppliers?

In the supplier approval process, a detailed segmentation based on various criteria is carried out to ensure an accurate and appropriate selection of suppliers.

The solvency of each supplier should be analyzed. To do this, several factors should be analyzed. It is important to carry out an exhaustive quality questionnaire that helps us to evaluate whether our suppliers meet the quality criteria we demand. This questionnaire covers aspects such as product reliability, manufacturing standards, quality control and responsiveness to potential problems or complaints.

To begin with, if it is a Spanish supplier, the first thing you have to check is whether the company is up to date with its payments to the Tax Agency and the Social Security. If it is not and you buy from it, the Public Administration can claim its payment from you.

You should also check if it is a company that covers its risks, that is to say, if it has insurance that covers its liability. If it does not, if that supplier has an accident on your premises or in connection with a service it provides to you or on your behalf, you should be covered for this risk.

It is also very interesting to know its annual accounts to know its economic solvency. Imagine that it is selling you 500,000 euros and its share capital is 3000 euros. What would you believe about that company? Or that after selling you that half a million euros, you see that its entire turnover is 600,000 euros. The dependence it has on you is brutal. Imagine that with that capital of 3000 euros, without fixed assets and with that turnover, its level of indebtedness is 200,000 euros. You have to be able to interpret very well the annual accounts of your supplier to know him minimally.

Once all relevant information has been collected and evaluated, a detailed report is issued and, in some cases, an approval certification is granted to conclude the outcome of the process. This certification confirms that the supplier has been evaluated and complies with the established requirements, thus providing additional assurance of quality and reliability.

Finally, we proceed to the creation of a definitive list that constitutes an official registry of approved suppliers. This list is updated periodically and serves as a reference for future collaborations and acquisitions, ensuring that we work only with reliable suppliers that meet our quality and service standards.

What happens if I do not carry out a homologation process?

Let us remember that in this process we are only approving suppliers, that is, verifying whether or not they all meet the company's needs and legal requirements. 

As mentioned above, working with a non-compliant supplier can have serious consequences for your company, especially financially. This includes possible fines, penalties or litigation arising from unlawful business practices, contractual breaches or violations of environmental, labor or safety regulations.

In addition, lack of supplier certification can affect the stability and efficiency of the company's supply chain. Reliance on unreliable suppliers can result in delivery delays, product shortages or production interruptions, affecting the company's ability to meet contractual commitments and satisfy market demands.

And, of course, working with suppliers that are not legally compliant or professional can damage a company's reputation and credibility with customers, investors and other stakeholders. This can affect brand perception and have a negative impact on long-term business relationships.

Approve your suppliers easily

You need to control a series of requirements and live documentation of each supplier that either you have a rigorous administrative control, or you hire a platform that allows you to be sure that you are dealing with the supplier you need at all times.

Manage your suppliers in one place thanks to Dokify. Our tool facilitates the approval process, whether you are a buyer or a supplier, contact us!

More information on supplier qualification

More information on Purchase Approval