Part 3: Managing Risk In Your Global Supply Chain – The Vendor Assessment ProcessMay 3, 2017
In the first two installments of this three-part blog series, we discussed the overall importance of Corporate Social Responsibility (CSR), outlined the first step in implementing a CSR program – Setting Standards of Vendor Engagement, and then reviewed the 4 Critical Terms of Engagement vendors should be expected to uphold to build the foundation for a healthy, lasting and successful relationship. In this installment, we will review the final step in the series, The Vendor Assessment Process.
Now that you’ve outlined and shared what’s expected of each vendor, it’s time to see how the vendor(s) measure up to your standards by performing an on-site assessment. This is the last critical step in the overall onboarding process of a new vendor, and must occur prior to issuing any sample requests.
As with everything else, the assessment process should be clearly defined so that the vendor knows what to expect, giving them time to prepare any documentation needed for the assessment and/or time to fix potential issues prior to the on-site visit, all in an effort to ensure assessment day goes smoothly.
Below is an outline of the steps that should be taken during the assessment process. During the Prep stage, it is very important to make sure the vendor understands that an on-site assessment should not be viewed as a negative step, but in contrary, as a positive step toward establishing a long-lasting working relationship. In essence, yes, you are covering your own back to make sure what the vendor filled out and agreed to during the onboarding process is correct. But it’s in the best interest of both parties for you to do so, to ensure all standards and terms were interpreted correctly.
Setup – During the onboarding process, vendors are required to fill out all of the new vendor forms and provide any required documentation and/or certifications. This includes a factory disclosure that includes details such as factory name, address, production processes, etc. to create a comprehensive vendor profile. All information should be stored in a centralized location.
Prep – Once the vendor profile is complete, a letter of introduction is sent to the vendor outlining the details of your CSR program and explaining the pre-sourcing authorization process. If the vendor is required to pay any compliance fees, they should be invoiced at this time. In addition, the assessment should be scheduled and a phone call or meeting should occur to discuss the process. It is important to use this phase to establish mutual understanding of the process and assessments are in all parties’ best interests.
Assessment – Prior to the assessment, the agent or representative conducting the assessment should determine the scope and set expectations for the process. The actual assessment should include a facility walkthrough, management interview, worker interviews and documentation review. The assessment should be based on the established Standards for Vendor Engagement and the set requirements to meet those standards. A closing meeting should take place to review the assessment and draft findings.
Post Assessment – After the assessment, the finding should be analyzed and guidance should be set for next steps. If the vendor passes the assessment, they will be authorized to begin manufacturing samples.
CAP – If the assessment finds that the vendor does not comply with the standards and terms, a Corrective Action Plan (CAP) should be issued. The CAP should outline a strategy and timeline for making the necessary improvements to become an authorized vendor.
For ongoing assurance of compliance, assessments should be completed on a yearly basis, or whatever you see fit. During all subsequent standard assessments, the process for prep, assessment, post assessment, and, when necessary, CAP, should remain the same.
As with the onboarding process, there are solutions available to help streamline the actual assessment process. Some solutions offer geolocation functionality to map out and group factories to be inspected by region, so Inspectors can be scheduled more efficiently. Once an Inspector has been assigned, ideally the solution will offer a Tablet App, like NGC’s Vendor Compliance solution, so assignments and the forms to be filled out can be uploaded to the Inspector’s tablet. On-site, Inspectors can enter the results directly into the tablet and upload the results immediately, or upon gaining internet access. This avoids any data entry errors, speeds up the actual data entry process, and links the results directly to the Vendor’s Profile. From there, the results can be accessed by any global system user, and reports can be generated, as well as Vendor Scorecards.
As we said at the beginning of this blog series, Corporate Social Responsibility is an important topic right now. With the information we’ve outlined over the course of this series, we hope that you have a better idea on how to manage risk in your global supply chain, specifically from a vendor onboarding and management perspective, and are aware of the solutions available to assist you. For more information on NGC’s Vendor Compliance solution, or to request a demo of the solution, contact us.