How to Evaluate all your Supply Options for Chemical Raw Materials
Read Time: 3-4 minutes
Good morning, today I’m going to explain how to evaluate all the supplier options for the chemical raw materials and ingredients you need.
We’ve previously touched on how you find the suppliers, now we are looking at how we assess our options.
At a high level, a good supplier ensures we get what we need, when we need it, for a fair price.
Simple.
But many still make common mistakes by not being thorough enough with their evaluation. Leading to choosing suppliers based on convenience or cost alone, overlooking factors such as reliability, ethical practices, and sustainability, which may result in future operational and reputational risks.
Key points we will discuss:
Reliability and Efficiency
Transparency and Ethics
Sustainability
Cost
"Alone we can do so little; together we can do so much." – Helen Keller
Assessing Supplier Reliability and Efficiency
Ideally, a supplier delivers consistently high-quality materials on time, ensuring your production processes are uninterrupted. Much like we discussed last week looking at LSPs, what metrics do your suppliers have? Do they measure on-time deliveries?
How can you evaluate potential suppliers on their track record or reliability and operational efficiency, as well as there ability to handle unexpected challenges? Do they have contingency plans themselves? How have they handled recent supply chain disruptions?
The Importance of Transparency and Ethical Practices
Transparency in how suppliers source their materials and conduct their business is crucial. Choose suppliers that adhere to ethical practices and are open about their operations.
A good barometer for me is, am I happy to be associated with this business?
I work using a fully transparent supply chain. The end-user and supplier can freely exchange and have an open dialogue.
Ask them about their ethics, working conditions, their own supplier assessment practices. Can you have them to complete a declaration which details your expectations, and has check-ins to confirm compliance?
McKinsey & Company surveyed manufacturers of smart appliances and found only 2% of companies have visibility into their supply base beyond second tier. And only 21% know tier 2!!
I don’t know the numbers for chemical companies, however if it were roughly the same, that would mean roughly 1 in 5 companies would not know the factory their distribution partner(s) buy their raw materials from, and only 2% beyond that.
Just imagine how much more foresight you could have in protecting yourself.
Staggering.
Evaluating Suppliers Based on Their Sustainability Efforts
We all know that sustainability is becoming an increasingly critical factor in all areas. So, we need to ensure that we are partnering with suppliers who prioritise environmentally friendly practices and have concrete sustainability initiatives.
I get it though, what does sustainability actually mean?
Well, think about:
Carbon Footprint
Water Usage
Recyclable Packaging
Zero Waste Initiatives
Biodiversity
Fair Trade Practices
If you have no plans in place for any of the above, start with just one.
Balancing with Competitive Pricing
Price is of course an important consideration, but it should never be the sole factor in a decision-making process.
You must evaluate the overall value offered by a supplier, considering the quality of materials, service reliability, ethical practices, and sustainability efforts. A supplier offering a lower price but compromising on these aspects may end up costing your business more in the long run.
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So, there you have it.
An insight into evaluating your options. Hopefully that’s given you some food for thought.
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Thanks for reading, and see you next week.
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