--- To enhance the value and performance of procurement and SCM practitioners and their organizations worldwide ---



Universal Supplier Qualification Process

Author(s):

Robert F. Smith, C.P.M.
Robert F. Smith, C.P.M., Training Technologies for Business, Winnetka, IL 60093, 847/446-5480.

82nd Annual International Conference Proceedings - 1997 

The program I will be describing today is a newly developed universal supplier qualification process. The process allows Purchasing professionals serving in all types of economic organizations to use a single process to qualify suppliers. The model is based on four attributes - Cost of Quality, Cost of Doing Business, Cost of Product and Value of Support.

The process was developed by four members of a value analysis team enrolled in the DePaul University Purchasing Certificate program. The team included Urbano Damian, Brian Downing, Luanne Londowski, and Mark Power. Their goal was to review and document a universal supplier qualification process which could be implemented across several diverse industries which would minimize risk, reduce time to market, and eliminate redundancies during the supplier qualification process.

Each team member flow charted their own organizations supplier process. The companies studied included Royal Box Company, St. Francis Hospital, Chicago Faucet Company, and Rockwell International. The diverse nature of these businesses offered several variations of the proper steps and attributes which need to be addressed in the supplier qualification process. The variations include supplier qualification processes which focus on the prequalification process emphasizing financial stability of the supplier candidate to processes that focus on the processes that occur after a purchase commitment had been placed. The team compared similarities and differences and categorized them to determine their feasibility for inclusion in the final process. These steps included:

Similarities

  • Preferred/Qualified Supplier
  • Request Bid For Proposal
  • Negotiations Conducted
  • Supplier Approved
  • Supplier Disapproved
  • Purchase Order Placed

Dissimilarities

  • Financial Analysis Conducted
  • Quality Audit Required
  • Technical Specification Required
  • Certification Implemented
  • Marketing Requirement Required
  • Verification of Material Receipt

As the team proceeded with their analysis they developed attributes which were placed into four categories. These attributes included:

Quality Attributes

  • Management Responsibility
  • Quality Systems
  • Requirements Review
  • Design Control
  • Supplier Qualification Process
  • Process Control
  • Inspection and Testing
  • Corrective and Prevention Action
  • Handling, Storage, Packaging and Delivery
  • Internal Quality Records
  • Statistical Records

Business Attributes

  • Financial Stability
  • Management Expertise
  • Industry Position
  • Technology/Product Innovation
  • Adequate Capacity
  • Business Systems
  • Proper Equipment
  • Commitment
  • Strategic Synergy's
  • Partnering Experience

Product Attributes

  • Requirements Defined
  • Meets Customer Requirements
  • Standardized Items Specified Where Possible
  • Regulatory Compliance
  • Reliability of Design
  • Fitness of Use
  • Human Factors

Support Attributes

  • Product Support Methodology
  • Product Training
  • Product Installation
  • Maintenance and Repair
  • Product Warranty
  • Product Diagnostics
  • Customer Support Responsiveness

During the process of identifying the key attributes in the four categories and comparing these attributes against each team member's flow charted supplier qualification process it was determined that many flaws existed in each organization's process. The flaws occurred because each process looked at a narrow piece of the business i.e., Purchasing, Quality, Finance, and not at identifying the total value and risk to the organization. The team decided that a universal supplier qualification process would have to determine the total value of the supplier candidates proposed as well as identifying the associated risks.

The team used the developed attributes to create a process model that could be implemented universally across different industries. This model is divided into four attributes; Quality, Business, Product, and Support. Each of the four key attributes are divided into several different elements which need to be reviewed and weighted depending on the requirements and the needs of the organization. The results of the review and weighting process will be equated to the Cost of Quality, Cost of Doing Business and Product Cost. Once this is identified each company can determine the total value of the suppliers proposition. The model also serves as a risk management assessment. Supplier qualification and selection is critical today for the continued success of a business enterprise. The team believes that the process identifies potential risks and addresses the complexity of supply qualification at strategic levels.

Summary and Conclusion. The importance of supplier qualification to the success of the organization will continue to grow. Today in most manufacturing environments greater than 50 percent of cost of product are spent on materials. Organizations that want to stay competitive in today's global environment must identify and implement a supply qualification methodology that enables them to leverage each core competency and establish mutual benefits to all parties in a supply transaction. The process outlined by the team is a step toward a holistic approach to the confusion that has surrounded supplier qualification. Organizations that understand the importance of the supplier qualification process and implement a model that addresses the aggregate need of buyer, suppler, and customer will position themselves for success in the highly competitive global marketplace.

Benefits of the Model

  • Universal Process
  • Repeatable
  • Total Value Identified
  • Shorter Time to Market
  • Lower Total Acquisition Costs
  • Sharing of Technology
  • Holistic Approach
  • Risk Management Model
  • Superior Supplier Selection
  • Superior Customer Satisfaction
  • Partnership Based
  • Early Supplier Involvement

Back to Top