Nine crucial questions to ask prospective suppliers, by ediTRACK
Written by Andy Sammars (pictured), a key account manager at ediTRACK
When it comes to underlining the importance of selecting the right supplier, we’re spoilt for choice with supply chain horror stories to choose from. There’s been a plethora of safety and security lapses over the past year, from the Rana Plaza disaster through to the more recent findings by Greenpeace of toxic chemicals in multiple retailers’ clothing lines.
It seems that even the big names aren’t safe; retailers from Primark through to Burberry have been let down by their suppliers with very public consequences. Other common issues that companies have with suppliers are those of poor communication, substandard goods and late deliveries. It can be incredibly difficult to find a supplier that meets the needs of your business.
Software such as ediTRACK’s Ethical Trade product can help you to select suppliers with a visible proven track record. However, some suppliers are very adept at dodging audits and disguising non-compliance, so how can you be confident that you’re selecting the best supplier? What questions should you ask suppliers before purchasing?
Whether you operate using three suppliers or three hundred, these questions will help you to analyse potential suppliers’ processes and effectiveness, establish their ethical status, and possibly even give you room to negotiate on price.
What are your ethical credentials?
As soon as a supplier enters into your supply chain, its ethical credentials become an extension of your own, and you become complicit in – and answerable for – its ethical conduct. Is the supplier committed to environmental sustainability and ethical compliance? Can it provide you with audit results from an external party? Will it agree to an initial audit from you, and regular audits during the contract?
Do you have any evidence of the quality of your processes and/or products?
When a supplier is truly committed to high standards of quality, they are usually able to show you evidence – for example through certificates of quality initiatives such as ISO 9001.
How happy are your other clients? What reasons did former customers have for leaving you?
One way to establish a prospective supplier’s competency is to speak to the people who deal, or dealt, with them directly. Can the supplier provide you with references from other customers? Find out what problems they faced – were deliveries timely, and audits clean?
Do you have the capacity to meet our requirements? How fast can you respond to changes in demand?
Make sure that the supplier’s capabilities are aligned with your needs. This is particularly important for fast fashion retailers for whom demand can dip and soar sharply, being dependent on a wide variety of factors not least of all the rapidly changing trends in the fashion world. A supplier must have ample resource and control over its procedures to quickly react to new requirements whilst keeping lead times down to a minimum.
Are you in good financial health?
Suppliers that can demonstrate on-going financial strength are a far safer bet for a long-term relationship. Suppliers who are financially secure are more likely to survive a rocky economy.
What are your prices?
An obvious question, and yet not necessarily indicative of a supplier’s suitability. See how the supplier’s costs compare to its competitors, but take into account the quality of the goods provided and the security and efficiency of its processes when you do so. Other questions to ask in line with this theme are: Can you provide a full breakdown of charges, including delivery?; What are the payment terms?; What discounts do you offer?; What contract lengths do you offer? Can you give me a liability insurance certificate?; Would you engage in a cost reduction programme?
Do you understand our business?
The fastest way to find out if a supplier can meet your needs is to make sure they understand you. Ideally the supplier will have previous experience with similar businesses to you, and will be able to demonstrate knowledge of the relevant technologies and issues affecting your business.
What processes do you have in place to ensure consistency of quality/meeting deadlines?
A supplier that takes quality control and meeting deadlines seriously will have processes in place to ensure this. They may also offer discounts for late deliveries / refunds for undelivered stock – ask what these are before entering into a contract with them.
What’s your approach towards communication?
Find out who your main point of contact will be, and how regularly you can expect to be in contact with them. What’s the supplier’s communications strategy in the event of supply chain disruption or a major crisis – how will they notify you and keep you up to date on developments? If you won’t have a singular point of contact, ask about their customer service – is it both proactive and reactive?
EU and US agree end to Airbus-Boeing supply chain tariffs
The EU and US have agreed to resolve a 17-year dispute over aircraft subsidies, suspending tariffs on billions of dollars' worth of goods that have plagued procurement leaders on both sides of the Atlantic.
Under an agreement reached by European Commission Executive Vice-President Valdis Dombrovskis and US Trade Representative Katherine Tai on Tuesday, the tariffs will be halted for a period of at least five years.
It will bring an end to punitive and disruptive levies on supply chains that have little to do with the argument, which became embroiled in the trade battle. Businesses on both sides of the dispute have been hit with more than $3.3bn in duties since they were first imposed by the US in October 2019, according the EC.
The US imposed charges on goods upto $7.5bn in response to a World Trade Organisation ruling that judged the EU’s support of Airbus, its biggest aircraft manufacturer, unlawful. A year later in November 2020, the EU hit back. The WTO found the US had violated trade rules in its favourable treatment of Boeing, and was hit with EU duties worth $4bn.
In all the tariffs affected $11.5bn worth of goods, including French cheese, Scotch whisky, aircraft and machinery in Europe, and sugarcane products, handbags and tobacco in America. Procurement leaders on both sides of the fence were forced to wrestle with tariffs of 15% on aircraft and components, and 25% on non-aircraft related products.
Boeing-Airbus dispute by the numbers
- The dispute began in 2004
- Tariffs suspended for 5 years
- $11.5bn worth of goods affected by tariffs
- $3.3bn in duties paid by businesses to date
- 15% levy on aircraft and 25% on non-aircraft goods suspended
Both sides welcome end to tariffs
European Commission President Ursula von der Leyen branded the truce a “major step” in ending what is the longest running dispute in WTO history. It began in 2004.
“I am happy to see that after intensive work between the European Commission and the US administration, our transatlantic partnership is on its way to reaching cruising speed. This shows the new spirit of cooperation between the EU and the US and that we can solve the other issues to our mutual benefit,” she added.
Both aircraft manufacturers have welcomed the news. Airbus said in a statement that it will hopefully bring to an end the “lose-lose tariffs” that are affecting industries already facing “many challenges”. Boeing added that it will “fully support the U.S. Government’s efforts to ensure that the principles in this understanding are respected”.
The US aerospace firm added: "The understanding reached today commits the EU to addressing launch aid, and leaves in place the necessary rules to ensure that the EU and United States live up to that commitment, without requiring further WTO action."
This week’s decision expands upon a short-term tariff truce announced in March this year. The EC says it will work closely with the US to try and further resolve the dispute, establishing a Working Group on Large Civil Aircraft led by each side’s trade minister.
Airbus last month signalled to suppliers that post-pandemic recovery was on the horizon, telling them to scale up to meet a return to pre-COVID manufacturing levels. “The aviation sector is beginning to recover from the COVID-19 crisis,” said Airbus chief executive Guillaume Faury, adding that suppliers should prepare for a period of intensive production “when market conditions call for it.”