- Properly assessing and implementing risk evaluation and management before entering to any business relationship with a new supplier.
- Selecting the best candidate suppliers involving the right skills and capabilities during the selection process.
3.3.2. Phase of the process and timing
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This is the next step of the Planning select potential supplier step. The process is closely connected with the previous step. As follows:
- When all the needed information is collected, the Category Manager calls up a meeting with Quality in order to conduct a risk evaluation of the selected Suppliers. Unless otherwise required by special circumstances, Legal and Finance will be involved upon demand in case of Partner and Strategic suppliers.
- When the new recommended Supplier is selected, based on the risk evaluation meeting outcome, the qualification process can start and as well as the negotiation of the suitable purchase agreement.
- At the end of the qualification process, the SAP system is setup accordingly to the results; in case of positive outcome it is possible to start doing business with the new Supplier, in any other case this won’t be allowed.
3.3.3. Flow chart
No. Flow chart
1
2
3 Yes
4
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5
6
7
8
9
Yes
10
- Add Contract Type
Figure 3.4: Flow chart of evaluating potential suppliers and final approval (Fasolato, Bassini, Calonghi, & Suppini, 2015)
3.3.4. Analysis process
❖ Phase 2: upon the receipt of all the filled forms, the Category Manager calls a meeting with Supplier Quality Leader representatives to evaluate all the risk
❖ Phase 3: the risk evaluation with the recommendation from the meeting participants are sent to the Global Procurement Manager who can decide to escalate the decision involving other executives depending on the issues to be addressed.
❖ Phase 4: if the supplier is not selected for the qualification, ask the Category Manager to inform the Applicant and the Supplier adding the reasons for
refusal. Page 30
❖ Phase 5, 6, 7, 8: if the supplier is evaluated as “eligible for qualification”, ask the Category Manager to create the Supplier in setting the flag of “Purchasing block”, then:
- negotiates Purchase Agreement, if any;
- initiates the Supplier Qualification Process.
❖ Phase 9:
- If the results in a “Supplier Rejected” the Category Manager informs all the relevant parties involved.
- If the results in a “Supplier Qualified” and the Purchase Agreement is signed the Category Manager removes from SAP tool the “Purchasing block” flag informing all the relevant parties involved.
- If one or both of the two condition between “Supplier Qualified” and
“Purchase Agreement signed” is/are not satisfied and there is an urgency to start business with the Supplier regardless, the Category Manager calls a meeting with the Global Procurement Manager, the Supplier Quality Leader, Finance and Legal representatives to evaluate the risk of activating the supplier on a temporary basis.
Based on the risk evaluation and the recommendations from the meeting participants the Global Procurement Manager can:
- Decide to escalate the decision involving other executives depending on the issues to be addressed.
- If the risk is deemed as not acceptable establish to wait till both purchase agreement and quality conditions are satisfied.
- If the risk is deemed as acceptable, ask the Category Manager to remove from SAP the “Purchasing block” flag and activate the supplier on a temporary basis informing all the relevant parties involved.
In case the supplier has been activated on a temporary basis, being one of the two conditions above not fully satisfied (“Supplier Qualified” or “Purchase Agreement Signed”), it is mandatory to set the SAP expiration date to a certain date. If the missing
condition is satisfied before the expiration date, the CM will modify on SAP tool and set the expiration date to blank. In case the expiration date is reached and the missing
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condition is not satisfied yet, the above mentioned team will reconvene, evaluate the risk once again and decide whether to extend the expiration date or not extend, in which case the purchasing activity will be automatically prohibited by the SAP system from that date on until the missing condition will be fulfilled.
3.3.5. Evaluation implementation
❖ Good point
- The process is detailed to small activity.
- The meetings discuss assessing risk through the information gathered have been conducted carefully and effectively.
- The Category Manager is responsible for a lot of the work in this process.
They are the ones who select and offer prices with suppliers, they have little quality expertise so there is always enthusiastic support for quality related work from other groups.
❖ Limitations:
- According to Luu Quoc Tam (personal communication on November 09th, 2019): “It takes quite a long time to create a supplier, while there is a lot of demand for switching suppliers. It also takes time to get a license to use a supplier through the leaders.”.