This is the process of assessing supplier performance over time. Suppliers can be evaluated to determine their ability to meet lead time, product quality, and response to emergency needs among others. There are various reasons for evaluating the performance of suppliers.
- When the potential supplier is not ISO certified.
- When procuring items with high profit or risk;
- When non-standard items are purchased;
- When construction or similar civil works contracts are assigned;
- When procuring capital items: When a supplier has to improve, in order to eliminate the gaps between resources and capabilities of the supplier or potential supplier and the standards he must meet;
- In case of concluding arrangements based on the JIT (just-in-time) method;
- When the company is involved in global sourcing activities;
- In case of long-term e-procurement arrangements with strategic suppliers;
- When negotiating the TQM (total quality management) and the quality of the articles with high profit and major risks;
- When negotiating outsourcing contracts;
- In case of an important supplier, before approving subcontracting;
- In negotiating agreements on the level of services (SLA – service level agreements).
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