Organisations can better manage risks by limiting their exposure to unstable suppliers. The general principle being that insight into a supplier’s sustainability profile, will advance the procurement department’s ability to plan for and handle, disruptions in supply, inconsistencies in product quality, the sourcing of back up or new suppliers and a host of other related issues.
Having identified a growing need in this field, NERA have developed and launched a Supplier Sustainability Evaluation system. The system is aimed at assessing the all-round sustainability of individual business entities, enabling those interacting with them to make informed decisions.
According to Robert Thorburn of NERA, “The system provides a certificate, a report, administration report and in-depth insight into the measured entity’s sustainability and operations. ”
“Issues impacting on business relationships are identified. Specific examples may be inferior product standards, quality certifications issued to incompatible specifications, lacking distribution networks in specific locations, a lack of operational experience in a given area, substantial differences in business culture, etc.”
“The sustainability evaluation system can also be used as a precursor to the implementation of an enterprise development programme, or as a tool during consultation with a single client business,” says Thorburn.
The evaluation process
The process is preceded by the e-mailing of a general information letter to targeted businesses on a supplier database. This letter will inform them of the process and the parties involved.
Process implementation is divided into three parts:
1. Suppliers are segmented according to size, with larger (by trade volume) entities targeted first.
2. The top 5 to 15 suppliers are assessed in the first month, affording all parties involved time to review implementation and systems integration. The key concern regarding systems integration, is to ensure that the outputs generated by NERA are presented in a layout and format that can be introduced onto the client’s IT system.
3. Thereafter all other targeted suppliers are contacted.
The evaluation process is divided into four segments
1. After receiving the initial e-mail, each business is phoned to address any questions, confirm contact details and make arrangements for documentation to be provided as well as for a site visit to be performed.
2. If the service is not accepted, full business contact, divisional contact and contact person details will be confirmed, as well as information on brands offered.
3. If the service is accepted, an analyst will be assigned and he or she will collect needed details beforehand, perform the site visit and draft the certificate and report.
4. The certificate and report will go through a process of internal review, before being issued to the measured entity and the involved procurement department.
Deliverables
1. A supplier database clean up, with administrative details and product brand details updated, though this does not include an exhaustive list of all products offered by the measured entity. This result will be achieved irrespective of the business concerned entering into the evaluation process.
2. A sustainability certificate stating an overall short term sustainability level, will be issued.
3. A sustainability report detailing, discussing and rating 17 key areas of sustainability consisting of 47 sub indicators, will also be issued.
4. The certificate, report and administrative data will be available in PDF, while the report and administrative data will also be available in Excel format.
5. Industry or client specific additions may be made to the system, as per client need.
The Author, Robert Thorburn can be contacted on
Mobile: 082 877 1841
E-mail: robert@nerasa.co.za
