Supply chain professionals often all face the same problems on a daily basis when it comes to supplier and contractor relationship management. Insufficient information, a lack of co-operation and frustration can lead to unnecessary supply chain crisis that may put your brand at risk.
The common problems faced in supply chain everyday usually include poor performance; incidents on site; lack of control over contractor selection; lack of central supplier information; complex, time-consuming processes for managing supplier lists; and difficulty sourcing good quality new contractors.
There is however a solution to help eliminate these problems that is pretty simple to implement and it is compliance. Embracing compliance holistically in your supply chain and procurement processes can make your job and life much easier.
Here are three key compliance steps to follow to start improving supplier relationship management:
Step 1 – Check for capability
In order to have a clear indication of a supplier’s skills and experience, you need to evaluate their capability. Not doing this could result in working with a company that cannot maintain the high quality of service you expect from them. In the end, this could also put your company and supply chain at the risk of falling below standards. You should always check for:
- Information – Information you get from your suppliers via pre-qualification questionnaires should have necessary details about the job requirements and the supplier’s ability to do the job.
- Verification – This is often known as “pre-qualification”. This is when you gather proof and get convinced that the supplier has the capability to meet your strict health and safety demands.
- Authorization – After allowing the suppliers to work with you, authorization is meant to make sure that they finish the specific task you assign and do not extend their responsibility by their own accord.
Step 2 – Better supplier management
Managing compliance is more than about the basics of information and gathering evidence for authorization to work. Management of suppliers needs constant ensuring that contractual compliance is being adhered to. New and existing suppliers need relevant policy, rules and specifications to help them follow the rules:
- Policies and rules – This is making sure that suppliers know and follow rules and regulations. You need to also ensure that they have read your policies and understand every part of them.
- Contracts and specifications – Details need to be recorded and measured to make certain suppliers are finishing the work you expect of them. It is also required that there are internal processes in place to fulfil the contract on a long-term basis.
- Controls and restraints – These are important and ensure suppliers do their work and do not pursue side jobs that could put them and your business at risk and in trouble.
Step 3 – Monitoring your suppliers
There needs to be a system in place to monitor your suppliers’ progress so that you are certain they are abiding by your contractual agreements and meet their targets. This can be in an audit form which will help in pointing out areas for improvement. It can also assess the performance of the suppliers – a point crucial to maintaining high standards. Here’s how behaviour, audits and KPIs can assist you to monitor your suppliers:
- Behaviour – Physical monitoring of suppliers like spot checks, gives off a great sense of knowledge that you would never have collected from an assessment.
- Audit – Audit systems help you make sure that your team can regularly check the compliance of suppliers, provision of resources and the ability to continue serving.
- KPIs – Key performance indicators should be used with every supplier as they are practical and objective measurements of progress. It makes auditing easier to do.
Many businesses fail to carry these steps out, as simple as they may seem and end up facing supply chain management issues. Assuring compliance can help eliminate any of these issues.
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