The proper selection of suppliers is a determining factor in strengthening and efficiently managing the supply chain. However, in order for this choice to continue to contribute steadily to the company's growth, it is necessary to perform a periodic evaluation to ensure that suppliers continue to meet the criteria with which they were initially evaluated. We call this supplier re-evaluation.
Supplier re-evaluation is necessary to measure the performance level of current suppliers
to ensure that the business alliance is beneficial and that the companies that provide their products or services continue to be suitable for the purchasing company. In addition, this process has benefits such as:
- Risk reductionHelps to measure the risks associated with the commercial alliance and to identify and manage risks derived from dependence on certain suppliers.
- Reduce costs: Optimize costs by being able to review and renegotiate contracts to obtain better prices or conditions.
- Strategic adjustments: Ensures that suppliers are aligned with the organization's vision and strategic objectives and are adapted to its needs.
- Ensures legal compliance: Ensures that suppliers comply with all regulations and legalities related to the business alliance.
When to perform a supplier re-evaluation?
There is no set date for re-evaluation, since each purchasing company and each supplier is different, but they should be performed periodically to ensure efficiency in the processes. Some key moments to keep in mind for supplier re-evaluation are:
- Changes in market conditions: when there are significant changes in raw material prices, shortages or changes in laws or policies applicable to the company.
- Performance problems: re-evaluation is necessary if one or several suppliers are presenting non-compliances or failures in quality, production or if there are constant complaints from end consumers.
- Changes in business strategy: when the company decides to change its strategic focus, such as new product lines, markets, or sustainability policies.
Parameters for supplier re-evaluation
The re-evaluation should take into account parameters based on the initial evaluation criteria and the current situation of the acquiring company, such as its needs and expectations. In addition, factors such as quality, production capacity, delivery times and compliance during the life of the contract between the parties must be evaluated to achieve efficiency and success in supply chain management.
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