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ISO 9001 Blog

John Nolan

How to evaluate supplier performance according to ISO 9001:2015

In the ISO 9001:2015 standard, the requirement for an organization to establish criteria to assess, evaluate, and re-evaluate its suppliers will remain as it did in the previous version of the standard. The standard mentions that “criteria for selection, evaluation, and re-evaluation shall be established,” and that records shall be maintained. So, while the standard sets these parameters, it leaves the details open so that each individual organization can set the supplier criteria as it sees fit to ensure maximum value is obtained. From experience, I know that many organizations pay lip service to this process, but apart from being an ISO requirement, there are many reasons to take this seriously.

Evaluation: Why?

ISO 9001:2015 does not prescribe why you should evaluate and assess your suppliers, but there are several common sense reasons why you should. In the first place, when an organization takes on a supplier to provide a new product or service, there are some basic finance, resource, and suitability checks that most organizations would want to do. In the case of your evaluation of existing suppliers, why is this a good idea? And, if your organization undertakes this process, is it best to tell the suppliers, or not? I believe that informing your suppliers that they are being assessed and evaluated (if they are already ISO 9001 accredited themselves then they will know this) can be a positive thing, and here is why:

    • Cost: one of the primary drivers for assessing any supply chain. A supplier who knows it is under assessment will often be inspired to improve its price to ensure it remains in pole position.
    • Compliance: if your supplier is not compliant, then the knowledge that assessment is underway may provide the impetus to become compliant, whether it is ISO 9001, ISO 14001, or whatever compliance your organization expects. The end result is a better service for your organization.
  • Financial stability: this is a vital check. Should a supplier hit financial difficulties and go under midstream, then your organization has a problem. Constant financial checks are a way of mitigating this risk.
  • Quality and lead time: another two major performance indicators that suppliers can be encouraged to improve on when knowing constant assessment takes place. The result is good for you and your end users alike.
  • Mutually beneficial relationships: working with a supplier under these circumstances can lead to a sharing of knowledge and increase in understanding in terms of requirements. This can help to improve the level of service delivered to your organization.

So, the benefits are plain to see, and surely most organizations would want to accrue the positives described above. So, how do we manage this process?

Evaluation: How?

If you are evaluating a number of suppliers on behalf of your organization, then you probably want to do so in an even-handed and equal fashion where possible. Your organization is almost certainly being assessed in a similar fashion, and fair treatment is what you would expect. Most organizations construct a formal scorecard with which they can assess suppliers so that they are marked on an equal footing, with the criteria mentioned above marked, and a “comments” box where any positives or negatives can be recorded. For example, if a supplier responded to an emergency situation your organization had and produced product at half the predicted lead time to help you out, you would want that to be recorded. So, you must decide what your criteria are, decide at what frequency you will assess suppliers, and ensure all the results are formally recorded.

So, is that the end, then? Well, no, not quite. You also must decide what your process will be when a supplier falls below the expected standard. As mentioned above, working together collaboratively can be good for relationships and performance, but you also must have a strategy for replacing an underperforming supplier, which obviously includes protecting your business by having a newly assessed supplier in place before the relationship with the old one is severed. Therefore, you must use “risk-based thinking” during this process, also.

Supplier Evaluation: A good outcome

So, assessing supplier performance not only satisfies an ISO 9001:2015 requirement, some of which you can read more about from our Knowledge Base, but also brings real benefits for your business and improvements in cost, quality, and delivery in your supply chain. In fact, it is easy to see how the assessment and evaluation of your supply chain can also tie into the new “risk-based thinking” aspect of the 9001:2015 standard, given that supplier assessment, performed correctly, ensures that you are mitigating risk of non-conformance within that chain.

Perfectly implemented, your organization may find that decreased costs, increased compliance, better quality, shorter delivery time, and improved relationships are all tangible benefits of effective supplier management. In these competitive times, who wouldn’t want that?

For a better understanding of the auditing techniques, see this free online training: ISO 9001:2015 Internal Auditor Course.

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