The success of trading and manufacturing companies is strongly tied to the fact that the quality and security of supply of products, primary products or raw materials is always guaranteed. Selecting the right suppliers is about efficiency and cost-effectiveness, yet sustainability and reputation must also be considered. Companies that rely on supplier assessment according to ISO 9001 have an advantage – they benefit in terms of management and optimization of their supply chain. For example, the implementation of the Supply Chain Act , which has been in force since January 1st, can be firmly based on a systematic assessment of suppliers. We explain the added value that is associated with the certification and discuss which criteria are relevant.
The ISO 9001 quality management standard
Since 1987, the quality management standard DIN ISO 9001 has served as a guideline for the holistic and systematic evaluation of all relevant aspects of management systems. With DIN EN ISO 9001:2015, an updated version is available, which is intended to meet the changed requirements of the markets, the increasingly globally networked trade and the growing complexity in procurement.
ISO 9001 is the most widely used international standard in quality management and can be applied by any company offering products and services, regardless of company size.
ISO 9001 in supplier management
An important area of application is supplier management. The requirements for standard-compliant supplier evaluation are formulated in chapter 8.4 “Control of externally provided products and services”. To achieve certification, companies must define specific and verifiable criteria for the evaluation, re-evaluation, selection and performance monitoring of external suppliers and apply them in a comprehensible manner.
What are the benefits of a certified supplier rating?
Quality management certified to DIN ISO 9001 facilitates the ongoing optimization of the supplier network. Companies thus create the basis for continuously reviewing processes based on defined criteria and adjusting them if necessary. Which suppliers can be strategically developed further? Where would a higher diversification of the network be beneficial? Which suppliers do not meet the required standards? Monitoring based on fixed criteria brings transparency to supplier relationships and enables supplier performance to be compared on the basis of objectively measurable criteria.
Criteria for supplier selection and evaluation
Requirements directed at suppliers can vary depending on the company and the industry. For this reason, the criteria for supplier selection and evaluation are not laid down in DIN ISO 9001, but must be formulated and implemented by the company itself. If a company wishes to carry out a supplier evaluation in accordance with ISO 9001, business-specific risks and requirements should be examined in detail and evaluation criteria defined accordingly. The focus can be on delivery reliability, price, performance or geographical risks, for example. However, sustainability aspects and the implementation of new requirements such as the Supply Chain Act are also playing an increasingly important role.
Important criteria for selecting and evaluating suppliers may include:
- Quality of the delivered products and services
- Reliability,of deliveries, complaint rate
- Transparency of processes and supplier network
- Technological criteria of cooperation/collaboration
- Delivery quantity, delivery date and flexibility
- Price of purchased products and services/price-performance ratio
- Risk of supplier failure or consequences of failure to meet requirements
- Trust and reliability in cooperation
- Dependence of the customer on the supplier
- Geographical location of suppliers and associated risks
- Advantages in the area of innovation compared to competitors
- Fulfillment of sustainability criteria or demonstrable efforts
Involving suppliers: the quality assurance agreement
Before entering into a new supplier relationship, binding standards should be defined with regard to quality-assured procurement in accordance with the criteria of DIN EN ISO 9001. A suitable means is, for example, a so-called quality assurance agreement (QAA). This sets out in detail the quality assurance measures the company expects from its supplier.
ISO 9001 does not contain any detailed requirements for such an agreement, but in section 8.4.3 it prescribes some points which should be included:
- Products and services to be delivered by the supplier
- Processes you want them to perform on your behalf
- Procedure for the approval or release of products and services
- Procedure for the approval or release of methods, processes or equipment
- Requirements for employee competence, e.g. necessary qualifications of supplier personnel
- Specifications for cooperation with regard to quality management
- Procedure for controlling and monitoring supplier performance
- Verification activities that your company or your customers intend to carry out at the supplier’s premises
Ideally, the QAA is an agreement based on a negotiation process between the company and the supplier. The supplier should be actively involved so that quality assurance can be carried out in trusting cooperation and communication right from the start. It is particularly promising if the supplier in question also maintains a certified quality management system. This increases the certainty that requirements for products and services are systematically defined, monitored and complied with.
Detailed agreements increase transparency and reduce risks
An agreement on transparency of the processes and structures in the supplier’s business area and its downstream supply network is also possible. For example, compliance with documentation requirements regarding sustainability and corresponding legislation such as the Supply Chain Act can be included in the quality assurance agreements. In this way, quality assurance can contribute to the best possible optimization of cooperation and reduce a wide range of risks in the value creation process in a targeted and comprehensive manner.