Supplier Evaluation and Performance Monitoring

Supplier Evaluation and Performance Monitoring   Sometimes many supply chain student and practitioners  are asked about how to audi... 3:15 AM

Supplier Evaluation and Performance Monitoring

 

Sometimes many supply chain student and practitioners  are asked about how to audit supplier and make Supplier Evaluation and Performance Monitoring report.

Here, as a reference I am giving below a reference copy of System Procedure of  ABC company to give them answer of;

How to evaluate supplier

How to measure supplier performance

How to monitor supplier activity

How to make report of Supplier Evaluation and Performance Monitoring.

Do hope the all the below data will helpful to supply chain students and practitioner. You may also consult it to any good supply chain professional.

1.0  PurposE      

      To devise a system, establish a procedure, assign responsibilities and provide instructions for Initiation of supplier evaluation.

·          *  Evaluation of existing and new suppliers.

·         * Initiating actions on identification of out-of-specification product / supply from supplier.

·         * Taking appropriate corrective actions against deviations originated form their supplies.

·         * Monitoring their performance and re-evaluating them.

2.0.  Scope

The procedure is applicable for;

All those suppliers who are supplying those products and service which can directly or indirectly affect the Quality of ABC Company products and services.

3.0.  abbreviation

            3.1   MM           =          Materials Manager

            3.2   PO           =          Purchase Officer

            3.3   QA           =          Quality Assurance

            3.4   TSM         =          Technical Service

            3.5   MD           =          Managing Director

            3.6.  NSM        =          National Sales Manger

             3.7.   FC         =    Financial Controller

4.0     Responsibility

4.1     The table below list the responsibilities related to suppliers evaluation

Type	Item	Evaluation Activity / Re-Evaluation Activity Execution	Approval / Deletion	Records
Products	Raw Materials (Imported)	. MM / FC	FC
	Imported Raw Materials (Purchased Locally)	PO / FC	FC	PO
	Locally Manufactured Raw Materials	PO / FC	FC	PO
	Packaging Materials (Imported)	MM / FC	FC
	Imported Packaging materials (Purchased Locally)	PO / FC	FC	PO
	Locally manufactured Packaging materials	PO / FC	FC	PO
	Laboratory Reagents	PO / QAM	QAM	PO
	Production assemblies e.g. filters, sieves, dies purchases etc.	PO / PM	TSM / PM	PO
	Machines, Machine parts, Testing Equipments	PO/QAM	QAM/TSM/PM	PO
Services	Contract Manufacturing	TSM / QAM	MD	TSM/DDC
	Distribution	NSM	MD	NSM
	Clearing Forwarding, Custom Clearance	Asst. MM	FC	Asst. MM
	Calibration	TSM / QAM	QAM / TSM	TSM/DDC
	Training	TSM	MD	TSM/DDC
	Consultancy	TSM	MD	TSM/DDC
	Equipment Maintenance	TSM	MD	TSM/DDC

5.0.   Procedure

5.1  Initiation of Evaluation Activity

Whenever a potential supplier approaches the ABC Company or ABC Company decides to purchase product / service form a particular supplier, the designations responsible for supplier evaluation takes the verbal concurrence from designations responsible for the approval of that supplier of that particular item.

For existing supplier the designations responsible for the approval of that supplier of that particular item.

The supplier evaluation form is faxed / mailed to supplier after filling the section “A” of the form.

5.2  Evaluation of existing suppliers

5.2.1      For existing suppliers, the evaluators, evaluates them on the basis of their past performance w.r.t.

1-    Quality Record  / Service delivered.

2-    On-time delivery.

3-    Quantity i.e. their ability to provide ordered quantity.

4-    Reputation.

5-    Capability to meet urgency.

6-    Quality System Practices.

7-    After Sales Service (where applicable).

5.3  Evaluation of New suppliers

 

5.3.1      For new suppliers, the evaluators evaluates them on the basis of following

1-    Company profile.

2-    Financial Status.

3-    Risk Calculation w.r.t. ABC Company. I.e. additional controls that ABC Company has to acquire.

4-    Cost competitiveness.

5-    Numbers of years in the business with pharmaceutical companies.

6-    Ability to safeguard intellectual property.

7-    Sample test results.

8-    Results obtained during the trial production run.

9-    Major customers.

10- Experience of other users using the same product or different product form the same company.

11- Production capabilities.

12- Major inspection / testing equipments.

13- Quality System practices.

14- System of after sales service and availability of spare parts (where applicable).

15- Level of skilled / trained personnel.

16- Stage of inspection and testing.

17- Supplier facility visit report.

5.3.2      Where applicable and feasible, the following activities are performed during the evaluation process

a)    Facility of the supplier is visited.

b) Sample is tested / inspected or use for trail purpose to evaluate the performance.

c)    Information is seek regarding the performance of the material and supplier in other companies by the evaluator during the evaluation process.

5.3.3  The evaluator documents his findings during the facility visit on supplier facility report.

5.3.4  After the evaluation form has been received for the supplier, the evaluator completes the section “C” of the form and attach the supplier facility report (where applicable) with the evaluation form.

5.3.5  The supplier evaluation form and other supporting documents (if any) like.  Company profile, Supplier Facility Visit Report, results of trial sample / production run etc. are submitted to the designations responsible for supplier approval.

5.3.6      For new suppliers, the evaluator gives their recommendations / comments based on the evaluation and then forwards for onward approval.

5.3.7   The designations responsible for approval / deletion decides whether to approve the supplier or not and the re-evaluation frequency in case of approval.

5.3.8   If the supplier is not approved at this stage, the subsequent activities will not be carried out.

5.3.9   After the supplier has been approved, the designations responsible for approval, returns the evaluation form to designations responsible for evaluation.

5.3.10   The designations responsible for evaluation files the evaluation form in a separate supplier file and update the approved supplier list.

5.4  Actions on supplier related non-conformities

5.4.1      Whenever any deviation / out-of-specification product / non-conformance related to product / service is identified by any individual during any stage of receiving, manufacturing, packaging and delivery is documented on NCR.

5.4.2     After the disposition of deviation / non-conformity, a copy of NCR is submitted by designations taking the disposition action to designations responsible for receiving inspection for expanded sampling and inspection / testing.

5.4.3      In case of critical / consistent minor deviations / non-conformities from the same supplier, the designations / areas affected by those deviations raises the CAR.

5.4.4      The CAR is send to MR for action.

5.4.5      The MR initiates the investigation for causes of deviations / non-conformance as per procedure.

5.4.6  The MR sends a copy of CAR to the respective evaluator / purchaser / area incharge to initiate the investigation and to propose a corrective action (if required).

5.4.7      If the causes of deviations / non-conformance is identified to be related to supplier the MR sends a copy of CAR to designations responsible for evaluation in order to take corrective actions.

5.4.8  The evaluator can either propose the corrective action or seeks the corrective actions from the supplier (in written).

5.4.9      The evaluator communicates to the supplier about the proposed corrective action.

5.4.10   If the product / service form the same supplier is received just after the deviation / non-conformity is identified the evaluator / area incharge / area responsible for receiving inspection ensures through checking / monitoring of the product / service.

6.0   Suppliers Performance Monitoring

Manager stores performs the supplier performance monitoring for suppliers of raw and packing materials, on order to order basis.

6.2.For Quality Parameters Asst. Stores Manager calculate the % points after all the material has been consumed and no NCR related to quality defect / efficiency has been raised against the purchase order requirements and assign the achieved % points using the table below (Table-1).

6.3.Whenever stores / warehouse receives the supply of raw and packing materials they calculate the % points for quality and Delivery time by comparing the actual status.

6.4.At the end of each quarter, Asst. Stores Manager calculate the over all % points and assign the ranking grade to supplier  as per table-2.

 TABLE – 1

quality	Points in %	quantity	Points in %	delivery	Points in %
Wrong Product  / Grade	20%	Complete order or Excess (<5%)	100%	Earlier or on time	100%
Damaged Container / bags	50%	< 5 – 1% of ordered	90 – 99% (2% / % of order)	Delay by 1-5 days	90 – 99% (2% / day)
Unsealed Container / bags	50%	< 6 – 10% of ordered	80 – 89% (2% / % of order)	Delay by 6-10 days	80 – 89% (2% / day)
Wrong labeling	5%	<11 – 15% of ordered	70 – 79% (2% / % of order)	Delay by 11-15 days	70 – 79% (2% / day)
Expired Material	20%	< 15 – 20% of ordered	60 – 69% (2% / % of order)	Delay by 16-20 days	60 – 69% (2% / day)
Material with <75% shelf life	10%	< 25 – 30% of ordered	50 – 59% (2% / % of order)	Delay by 21-25 days	50 – 59% (2% / day)
Test failure in minor parameter	10%	----	40 – 59% (2% / % of order)	Delay by 26-30 days	40 – 59% (2% / day)
Test Failure in major parameter	20%	----	0	> one month	0
Contaminated Product	20%	----	----	----	----
Product from different manufacturer	10%	----	----	----	----

TABLE –2

Ranking Table
95 – 100 %	Excellent Supplier	A – Grade
80 – 94 %	Good Supplier	B – Grade
70 – 79 %	Average Supplier	C – Grade
Below 70 %	Poor Supplier	D – Grade

6.4.1      The evaluator sends the performance evaluation to TSM who presents the status in System Review Meeting.

6.4.2      The designations identified under supplier approval / deletion decides whether to continue with the supplier or not.

7.0   related document

Suppliers Evaluation               

 Approved Supplier List            

 Suppliers Facility Visit Report 

Supplier Performance Monitoring