Wax Digital: eight steps to optimise supplier selection
Daniel Ball, business development director at Wax Digital, discusses eight ways in which organisations can optimise their supplier selections.
Buyers have a lot to think about when trying to source and onboard the best suppliers for upcoming projects. Finding suppliers that fulfil a set of criteria can be a slow and labour-intensive process. However, the supplier vetting process can be made simpler by using a pre-qualification questionnaire (PQQ). This is a set of questions suppliers must complete before they work with your business, and it’s a great way of quickly sourcing a list of appropriate suppliers before the tendering process begins.
It’s not just a box ticking exercise; a PQQ is a crucial stage of the supplier onboarding process and can reduce your supplier onboarding time and reduce risk.
The PQQ checklist: What does it need to include?
Whether you’re a large business which regularly on-boards suppliers, or one that has strict regulations surrounding third party vendors, there are eight key areas that should be covered to make sure the PQQ is as effective as possible:
1. Contact information
This should include all the important details that you will need to know about the vendor and will be handy if you need to contact them for other information. Not only will this give you confidence that the company is a legitimate business but will also provide you with the names of key contacts if any issues occur.
Key contact names, email address, company address and contact numbers
Website address and other online platforms
Registration numbers and legal status
Ownership information, partners and names of directors
2. Financial information
A supplier’s financial information will show whether they have the appropriate resources and stability to meet contract requirements. It’s important to request enough information to make a clear financial assessment. Ask for:
Previous three-year turnover figures
Credit rating and cash flow forecast
3. Insurance details
Does the vendor have the relevant insurance policies in place to cover potential problems such as injuries, losses and damages? If the vendor does not have this in place, you run the risk of being liable for any damages caused or issues within the supply chain. Types of insurance you need to look out for are:
Employer’s liability insurance
Public liability insurance
Product liability insurance
4. Quality assurance policies
It’s imperative to your business that goods and services comply with industry and regulatory standards Assessing if your supplier follows a quality assurance process will be the best indicator to ensure they deliver to a consistent standard. Including this question within your PQQ will help inform decision making when it comes to the tender process.
5. Health and safety standards
Check to make sure a vendor has a health and safety policy in place which complies with the Health and Safety Act (HSWA). Similar to insurance, this means your business will avoid liability against accidents in the supply chain.
6. Equal opportunity and sustainability goals
Onboarding suppliers who share the same values as your business will not only help you achieve your goals but will also make for a trusted and solid relationship. If your organisation is passionate about developing a diverse workforce and is driving a more sustainable future, it’s important to include questions in your PQQ that reflect this. Depending on your own values, the questions could refer to:
• CO2 reduction targets
• Plastic reduction measures
• Paper consumption
• Ride to work scheme
7. Professional and business position
When designing your PQQ, you may want to ask the organisation if there have been any previous offences or convictions that have been committed by key stakeholders such as directors, partners and proprietors. If the answer is yes, you can decide whether to proceed or not.
This final step is to ensure that the information provided by the vendor is both accurate and correct, offering your business reassurance from a legal perspective.
A PQQ can be sent to potential suppliers either by email or via an automated sourcing portal. It is recommended that before it is sent, the questionnaire is structured in a way that will easily identify the key pieces of information that is important to you – this will save your team time when reviewing each response.
For more information on procurement, supply chain and logistics topics - please take a look at the latest edition of Supply Chain Digital magazine.
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.”