Getting to know your supplier on a deeper level is a valuable part of a good supplier relationship and a necessary step to line up the best-suited suppliers for you. Therefore, always start with a crucial element! That is to start asking them questions for your organizational due-diligence and to keep your procurement practice smart, sustainable, and responsible.
In the 21st century, even during a pandemic, most industries are expanding at a rapid rate, and globalization has caused supply chains to adhere to new levels of complexity! Ensuring ethical & sustainable business practices through assessment hasn’t become a ‘nice to have’, but rather a ‘need to have’.
Companies rely on an extensive pool of suppliers and sub supplies located all over the world where some industries face a great issue in upholding ethical business practices including human rights, health, and safety as well as environmental protection. Hence the prospect of unsustainable, unsecure, and poor quality issues remain at large. The market has understood the importance of sustainable operations, and self-assessment is a great first step to follow up on your suppliers’ modes of operation.
Here we are sharing our best practices for supplier self-assessments;
1. Supplier self-assessments ought to be orderly and thorough
As redundant as it may sound, everything should be timed well, hence strive to make self-assessments a cornerstone of your supplier relationship management and send them out frequently whether that is annually or more/less frequent.
Engaging with suppliers proactively gives you a clear picture of suppliers' level of compliance and insights into existing modes of operation.
Assessments should be formulated differently for all the different categories within your supplier base. Questions in a supplier self-assessment are really an indication of what you would like your supplier to achieve, therefore align your questionnaires with categories, supplier locations, specific projects, business areas of your interest.
2. Always keep things explicit
Ensure that your suppliers understand that they will be subject to due diligence, such as supplier self-assessment, from the start of the relationship. This ensures that all suppliers uphold their end of the bargain by complying with your supplier code of conduct. Aligning expectations and goals always give a relationship a point of reference.
3. Digitize your processes!
Are you still using Excel sheets and traditional mail?
Well then now would be a great time to switch to a digital solution that enables you to scale up in the future especially with a team who may be working from across the globe.
A digital solution will ease information sharing across the organization to keep strategic buyers and category managers in the loop at all times to speed up processes.
Digitalization will also increase reply rates as suppliers won’t have to do a lot of manual work in order to share their responses. Therefore remove as many barriers as possible to enhance the engagement from suppliers’ answers and it all starts with a seamless UX (user-experience).
Additionally, digitization helps make things scalable to combat overlap, inefficient workflows, and lack of data transparency.
4. Data Gathering should be defined
Have you thought about what you can do with the data you have gathered from your suppliers?
Having a defined assessment scope in line with your Supplier code of conduct will ensure that data coming in from suppliers is systematic. Defining data sets increases transparency between all supplier's data for proper comparability to enable the tracking of supplier progress over time. When data comes in it is deemed useless until there can be conclusions drawn from it. Therefore your data gathering process will help you gain business intelligence and visualize supplier responses.
5. Don’t stop at data gathering. Analyze > Visualize
Set assessment KPIs that generate valuable data sets to be compiled and processed in areas of interest.
Supplier analytics aids companies to predict future requirements and optimize business processes. It is a framework that procurement and sourcing professionals use to help them focus on suppliers that bring in value. With the right, KPIs suppliers can be rated in order to assess where they are and where they are headed. By assessing your suppliers with quantitative measures, you’ll see what improvement can be done on your suppliers’ side, and address them accordingly to aid future negotiations, collaborate better, speed ahead with project development plans, and to consolidate your supplier base.
6. Gather data best suited for your business needs
Supplier compliance varies from business to business therefore it is essential to understand their full potential that fits in line with your company’s core business needs. Only you are able to define the scope of your assessment, so focus on gathering responses of self-assessments in line with your overall governance strategy.
Be aware of any supplier risks associated with their business category, locality, economic situation, etc, this will help you formulate the assessment objectively in order to focus on gathering the key data points from your questionnaire.
7. Ask the RIGHT questions
In order to gain the best insight into your supplier, you need to ask the most pivotal questions. Results obtained from suppliers will be dependent upon the quality of the questions, and the way you formulate them. Ask questions that drive performance towards your desired business goal and KPIs.
We have all filled out long questionnaires at some point and detested them. Hence focus on the good questions being asked in the right way. Simply turn your long-worded assessors into multiple choices to keep things clear, focused, and easy for the supplier. This will help generate numerical insights.
Keep some of your questions conditional and open-ended; because not all suppliers will be able to discreetly reply with yes or no! Some suppliers have long-standing relationships with organizations and have proved their consistency over time, however just by being incompatible with a single KPI they might end up rating poorly on their self-assessment.
This is why conditional questions are so important. You can’t expect all suppliers to mirror the same levels of compliance as the top 10 so give them some wiggle room. And finally, gather as many certifications and documents from suppliers as possible as a means for further assessing them.
