cfo establishing comprehensive supplier qualification processes key findings

PROCUREMENT STRATEGY COUNCIL TM JULY 2006 www.psc.executiveboard.com

KEY FINDINGS Establishing Comprehensive Supplier Qualification Processes

2006 CORPORATE EXECUTIVE BOARD. ALL RIGHTS RESERVED.

Based on specificity of the organization’s needs and available resources, companies can either adopt or develop qualification standards.

ISSUE OVERVIEW

As organizations increasingly collaborate with fewer strategic suppliers, procurement organizations face the challenge of driving supplier improvement through quantifiable and clearly defined evaluation criteria. The supplier qualification process helps identify candidates for strategic relationships, facilitates communication with potential suppliers, and ensures new suppliers meet firm-wide quality, management, and safety standards. Leading companies recognize the importance of comprehensive supplier qualification processes but struggle to communicate qualification requirements to potential suppliers, create baselines for evaluating supplier risk levels, and ensure material conformance to specific requirements. Some procurement functions adopt recognized qualification standards to evaluate product quality during supplier qualification. International standards, such as ISO 9000 or TS-16949, promote broad participation and qualification of suppliers and create selection criteria for several processes including design control, inspections, equipment testing, handling, storing, packaging, and delivery. Recognized qualification standards such as ISO 9000 outline management processes and enable high-quality production, but may prove too general for industry specifications. As a result, companies often create supplementary criteria to ensure comprehensive supplier evaluations and applicability to specific industry needs. The table below outlines benefits and challenges procurement executives must consider prior to adopting standard or custom qualification criteria.1 CUSTOM VERSUS RECOGNIZED QUALIFICATION STANDARDS Aligning the qualification process with company needs

Source: ProI Source: Procurement Strategy Council Research (2003)

BENEFITS CHALLENGES

CUSTOMIZED CRITERIA

Customizes supplier evaluations to

meet organization’s needs Focuses on industry-specific

standards Addresses each supplier’s

respective development areas

Requires extensive development

time and capital commitment Creates lack of uniformity across

business units and results in supplier miscommunications

STANDARD CRITERIA

Reduces need for preliminary

qualifications and site visits Provides an internationally

recognized foundation for quality measurement

Costly process for suppliers Does not guarantee continuous

quality improvement Quality standard too general for

specific materials

Related Council Research: BUILDING AGILE SUPPLIER QUALIFICATION PROCESSES (DECEMBER 2005) ENSURING SUPPLIER PRODUCTION QUALITY: KEY FINDINGS (JULY 2004) OPTIMIZING POLICIES AND PROCEDURES FOR ONSITE SUPPLIER AUDITS: INITIATIVE SNAPSHOT (FEBRUARY 2006)

PROCUREMENT STRATEGY COUNCIL PAGE 2 ESTABLISHING COMPREHENSIVE SUPPLIER QUALIFICATION PROCESSES


In addition to establishing appropriate selection criteria, procurement functions also need to maintain clear communication channels with potential suppliers at each stage of the qualification process. The function can choose from a variety of online tools, handbooks, or databases to establish expectations and requirements. Comprehensive supplier qualification processes and tools enable organizations to monitor supplier performance history and direct management attention to suppliers unable to meet qualification criteria. By establishing and measuring performance baselines, Procurement can save time and resources by disqualifying suppliers that do not meet required company standards. To assist members with challenges in implementing effective supplier qualification procedures, the Procurement Strategy Council presents the following findings. KEY FINDINGS Council research identified several strategies procurement organizations implement to ensure optimal and consistent supplier qualification standards, including the following: • Deploy electronic tools to manage qualification data: As companies

increasingly shift sourcing strategies to encompass multiple markets, procurement functions should maintain supplier portals or automated data management systems to track qualification information for global suppliers. Global electronic databases increase transparency across procurement staff and business units. This visibility increases access to qualification requirements and audit results and encourages communication with suppliers to quickly resolve identified issues.

Procurement at Cadbury Schweppes (profiled on pages 4-5) manages the qualification process for over 3,000 global suppliers through a supplier information database called FLAIR. The database automatically asks suppliers to provide additional or updated qualification information, including suppliers’ commercial status, ethical sourcing standards, innovation strategies, and business models. A color coded “stoplight” system within FLAIR records audit results and enables the procurement function to determine need for additional onsite audits of supplier facilities.

• Establish and measure supplier safety risk levels: To ensure potential suppliers meet firm-wide health and safety standards, procurement functions should require suppliers to supplement general qualification requirements with safety and insurance information. Some companies evaluate supplier risk based on Occupational Health & Safety Administration (OSHA) reportable accidents, while others require suppliers to complete detailed ethical assessments on policies and management practices.

At Salt River Project (SRP) (profiled on pages 6-8), Procurement Services collaborates with Risk Management during the supplier qualification process to track supplier safety information, compile supplier risk profiles, and verify insurance coverage. Risk Management develops and maintains a set of safety criteria measured through a Contractor Safety Management Program (CSMP) questionnaire. Contractors and service providers must meet or exceed a minimum risk score recommended by Risk Management to conduct business with SRP.



• Verify product quality levels: In addition to general qualification criteria, procurement functions must ensure that direct material suppliers’ products conform to the firm’s quality standards and specification requirements. The function should review supplier sample materials and manufacturing capabilities through on-site assessments and product reliability tests. Procurement should use these assessments to inform supplier selection and as a benchmark for post-contract performance evaluations. Strategic Sourcing at ON Semiconductor (profiled on pages 9-11) mandates direct material suppliers to complete a quality system self-assessment, submit quality certificates, and provide product samples for reliability testing prior to final approval. By incorporating additional material verification steps during the supplier qualification process, the function ensures suppliers’ products meet quality and durability standards, as well as conform to required specifications. Additionally, Strategic Sourcing utilizes a Specification Automated Mailing System (SAMS) to update suppliers with applicable material specification revisions.



!

INITIATIVE PROFILE: CADBURY SCHWEPPES UTILIZES A GLOBAL ELECTRONIC DATABASE TO MANAGE QUALIFICATION REQUIREMENTS Cadbury Schweppes is a leading global confectioner and soft drink producer. Since the company increasingly sources from global suppliers, the procurement function must ensure new global suppliers’ compliance with the firm’s quality and ethical sourcing standards. To improve management of global supplier qualification information, the company created a supplier information database called FLAIR. The database tracks supplier qualification requirements and directs management attention to areas of concern. The graphic below outlines Cadbury Schweppes’ standard supplier selection process. CADBURY SCHWEPPES’ STANDARD SUPPLIER QUALIFICATION PROCESS Cadbury Schweppes leverages technology to manage new supplier qualification information

Source: Cadbury Schweppes; Procurement Strategy Council Research (2006) FLAIR assists Procurement to manage qualification requirements during the full supplier qualification process, as outlined below: • Register new suppliers: During initial registration, Procurement enters

suppliers’ background information into the FLAIR database. • Evaluate suppliers in a competitive market environment: Procurement

requires potential suppliers to complete a Request for Information (RFI) and a supplier prequalification form (see Appendix A, page 12). The prequalification form includes detailed questions on the following four key selection criteria:

1. Financial qualification: Dunn & Bradstreet financial reports and insurance

information. 2. Ethical sourcing standards: Policies and performance related to

environment, health, and safety standards. 3. Research and development: Innovation capabilities, level of research

commitment, and alignment on common future development goals. 4. Business model: Expected growth in specific geographic areas.

Suppliers must meet all prequalification requirements to conduct business with Cadbury Schweppes. By tracking qualification information within FLAIR, Procurement identifies missing information and encourages potential suppliers to conform to company standards.

• Audit new suppliers: At Cadbury-Schweppes, the procurement function audits

new suppliers across all spend categories during the supplier qualification process. The FLAIR database tracks audit results through a color-coded

Company Capsule Industry: Food Manufacturing 2005 Sales: Over $5 Billion 2005 Employees: Over 50,000

The FLAIR database enables procurement to track supplier qualification information, record audit results, and monitor document expiration dates. Procurement asks

suppliers to provide updated qualification information

Procurement inputs supplier qualification information and performance history into FLAIR

FLAIR automatically notifies category managers when supplier documentation nears expiration

FLAIR’s color-coded “stoplights” record audit results

Potential suppliers submit RFI and prequalification questionnaire

The supplier prequalification form includes questions on financial information, ethical sourcing standards, research capability, and expected future growth.



“stoplight” system. Red scores indicate suppliers do not meet qualification standards, yellow scores highlight key issues requiring resolution, and green scores identify suppliers audited and approved for work with the company. Additionally, the system enables procurement to effectively measure number of suppliers audited and approved for work in the previous six months.

• Monitor supplier certifications: During the supplier qualification process, category managers maintain responsibility for communication with potential suppliers. To ensure compliance with enterprise-wide policies and procedures, these individuals meet with suppliers on a quarterly basis to assess selected key performance indicators (KPIs) on service quality and delivery. The FLAIR database automatically notifies category managers when supplier documentation nears expiration and requires renewal.

The procurement function currently qualifies and manages over 3,000 global suppliers through the database. By incorporating a supplier information database into the qualification process, Cadbury Schweppes’ procurement function monitors qualification requirements, increases transparency across the department on supplier performance history, and encourages communication with suppliers to quickly resolve identified issues. Additionally, procurement staff can create a single globally accessible entry within FLAIR to track qualification information and audit results for new suppliers providing goods or services in more than one region. Currently Procurement manually transfers supplier information from the FLAIR database into the company’s larger supplier management software enabled by Procuri. The software enables procurement staff to track previous communication with suppliers and utilize standard templates during the sourcing process. Cadbury Schweppes is developing an automated system to integrate supplier information from the FLAIR database to Procuri and plans to implement the new system by the end of 2006.

Stoplights within FLAIR direct management attention to potential suppliers unable to meet qualification criteria.

Procurement manages the qualification process for over 3,000 global suppliers through the FLAIR database.



INITIATIVE PROFILE: SRP’S PROCUREMENT FUNCTION COLLABORATES WITH RISK MANAGEMENT TO EVALUATE SUPPLIER RISK DURING QUALIFICATION Salt River Project (SRP) is one of the largest US government-owned utilities. The procurement function emphasizes supplier compliance with firm-wide health and safety standards since suppliers conduct a significant proportion of services on SRP property. Procurement Services maintains responsibility for evaluating and approving new suppliers and collaborates with Risk Management to establish and measure supplier risk levels. SRP enters all potential suppliers into an ERP system. Once suppliers demonstrate compliance to required health and safety standards, SRP integrates approved supplier information into a central repository called the Supplier Information Database (SIDS). Procurement Services and Risk Management employ the following steps to evaluate supplier risk during qualification: • Initial registration: As a first step in evaluating supplier risk, Procurement

Services requires suppliers to submit a pre-qualification safety questionnaire in addition to general contact information, W-9 forms, and references. Once suppliers provide all registration information, Procurement Services enters the data into an ERP system. The checklist below outlines qualification information suppliers must submit during initial registration.

SALT RIVER PROJECT’S INITIAL REGISTRATION REQUIREMENTS Procurement Services requires the following qualification information during initial registration

Source: Salt River Project; Procurement Strategy Council Research (2006)

Company Capsule Industry: Electric Utilities • 2005 Sales: Between $1-5 billion • 2005 Employees: Under 10,000

During initial registration, suppliers must submit pre-qualification questionnaires, copies of safety and insurance certificates, and financial information.

Supplier Information Database (SIDS) questionnaire A brief questionnaire containing questions on general contact information, state licenses, financial information, and references. Contractor Safety Management Program (CSMP) pre-qualification questionnaire SRP requires suppliers to complete a pre-qualification safety questionnaire for on-site work at SRP facilities, work locations, or other properties. OSHA 200 / 300 Log Suppliers must submit copies of current year Occupational Safety & Health Administration (OSHA) 300 log sheets and OSHA 200/300 log sheets for previous three years Experience Modification Rating (EMR) Suppliers must submit copies of Experience Modification Ratings (EMRs) for current year and previous three years. EMRs must be certified by suppliers’ insurance carriers. W-9 form Request for taxpayer identification number and certificates.



• Safety and risk assessment: Risk Management supports Procurement Services to establish standard controls and evaluate supplier risk through the following procedures:

1. Establish consistent safety standards: Risk Management develops and

maintains a set of criteria to measure supplier risk through a Contractor Safety Management Program (CSMP) questionnaire (see Appendix B, page 17). The questionnaire covers topics including historical safety incidents, Occupational Safety & Health Administration (OSHA) recordable incidents, and internal safety and health training programs. Potential suppliers must meet or exceed a minimum standard recommended by Risk Management. The minimum standard is based on supplier size and level of risk relevant to services rendered. Senior management may override the qualification criteria for unique situations.

2. Monitor supplier risk: Risk Management enters supplier responses to the

CSMP questionnaire into a central database called the Risk Management Information System (RMIS). Based on performance on the CSMP scale, Risk Management compiles a risk profile for potential suppliers. Safety scores are valid for a period of three years. The database enables effective tracking of risk scores to ensure suppliers update safety information prior to expiration.

3. Verify insurance coverage: SRP requires the following insurance coverage

for any supplier or contractor performing services on SRP facilities, properties, or job sites:

• Worker’s Compensation: Statutory • Commercial General Liability: $2 million • Commercial Auto Liability: $2 million • Architect and Engineering Liability: $1 million

Risk Management gathers supplier insurance certification and stores information in the RMIS database for future reference. The department monitors expiration dates and sends letters to suppliers when certificates near expiration. After two failed attempts, Risk Management notifies Procurement Services to obtain certification directly from suppliers.

• Registration verification: Once Risk Management completes supplier risk

assessments, Procurement Services performs the following additional qualification checks on new suppliers:

1. Verify supplier stability: Procurement Services reviews Dunn & Bradstreet

reports, calls references, and analyzes suppliers’ risk profiles compiled by Risk Management. In some cases, Procurement Services contacts references for further verification.

2. Review government watchlists: Procurement Services checks suppliers

against the Office of Foreign Assets Control’s list of Specially Designated Nationals and Blocked Persons and the Department of State’s Foreign Terrorist Organizations.

3. Validate state certification: Procurement Services verifies state certification

for all contractors before final approval.

Risk Management establishes safety standards, monitors supplier risk, and verifies vendor insurance information.

Procurement Services disqualifies suppliers that do not meet required insurance coverage.

Procurement Services reviews supplier registration information, checks government watch-lists, and verifies state certificates.



• Data integration: Procurement Services next integrates vendor data from the ERP and RMIS systems into a single application called the Supplier Information Database (SIDS). The SIDS system tracks product and service information, work history, and safety records for all approved suppliers. To remain in the database, suppliers must resubmit registration information every two years. Additionally, the system enables internal business units to identify suppliers based on internal commodity codes, enter comments, and track supplier performance and historical issues.

The following graphic outlines ownership over different activities during SRP’s extensive supplier qualification process. SALT RIVER PROJECT’S SUPPLIER QUALIFICATION PROCESS Procurement Services and Risk Management functions at SRP collaborate to evaluate supplier risk Source: Salt River Project; Procurement Strategy Council Research (2006) The CSMP questionnaire provides Procurement Services with a consistent set of criteria to evaluate suppliers’ safety policies and programs. By collaborating with Risk Management early in the process to establish and measure supplier risk levels, Procurement Services continues to save time and resources by disqualifying suppliers that do not meet firm-wide health and safety standards. Additionally, the SIDS database enables Procurement Services staff to track number of suppliers approved during qualification in a given time period.

Procurement Services and Risk Managements collaborate to track supplier safety information, compile supplier risk profiles, and verify insurance coverage during the second qualification stage.

Initial Registration

Procurement Services: • Send qualification requirements to potential suppliers • Enter potential supplier information into ERP system

Supplier: • Submit pre-qualification questionnaires, safety certifications, financial

information, and references • Complete Contractor Safety Management Program (CSMP) questionnaire

Safety and Risk Assessment

Risk Management: • Enter supplier responses to CSMP questionnaire into Risk Management

Information System (RMIS) • Verify and track supplier insurance coverage through RMIS • Compile supplier risk profiles

Registration Verification

Procurement Services: • Review Dunn & Bradstreet reports, call references, and analyze supplier

risk profiles • Check suppliers against government watch-lists • Verify state license information

Data Integration

Procurement Services: • Integrate approved supplier information from ERP and RMIS systems

into Supplier Information Database (SIDS)

Procurement Services maintains a Supplier Information Database to track supplier qualification information and past performance.



INITIATIVE PROFILE: ON SEMICONDUCTOR ASSESSES QUALITY SYSTEMS TO QUALIFY ALL DIRECT MATERIAL SUPPLIERS ON Semiconductor is a leading manufacturer of power components and electrical appliances. Given the critical role direct goods play in production and operations, Strategic Sourcing incorporates additional quality verification steps during the supplier qualification process to ensure conformance to material specifications. Strategic Sourcing teams and supplier quality engineers collaborate to establish, communicate, and verify product quality requirements to potential suppliers. When the current supply base cannot meet direct material demands, a Strategic Sourcing manager evaluates new suppliers based on several qualification criteria, including financial stability, physical and technical capability, cost-competitiveness, and timeliness of delivery. The following flowchart outlines the process for qualifying and selecting direct suppliers at ON Semiconductor. ON SEMICONDUCTOR’S SUPPLIER QUALIFICATION PROCESS Strategic Sourcing inspects quality of suppliers’ product samples during the qualification process

Source: ON Semiconductor; Procurement Strategy Council Research (2006)

Company Capsule Industry: Electronics 2005 Sales: $1-5 Billion 2005 Employees: 10,000-50,000

During qualification, strategic sourcing mandates suppliers to complete a quality system self assessment, submit quality certificates, and provide product samples for evaluation.

Select potential suppliers using qualification criteria (Strategic Sourcing Team)

RFQ potential suppliers (Sourcing Manager)

Request Quality System self assessment & copy of

certificate (Supplier/Quality Engineers)

Select best candidate(s) based on: RFQ, SA, and

criteria (Strategic Sourcing Team)

Perform on site quality assessment

(Supplier/Quality Engineers)

Recommend to

proceed?

RFQ top suppliers (Sourcing Manager)

Ask supplier to submit material samples

(Sourcing Manager)

Inspect supplier products and process capabilities

(Quality Engineers)

Any acceptable from existing supply base?

Review current supply base(Strategic Sourcing Team)

Requirement for direct material identified

(Strategic Sourcing Team)

Pricing acceptable?

Parts pass qualification?

Request new quote(s) or

consider other suppliers

Proceed with production order

(Sourcing Manager) Yes

Yes No No

Yes

No

Yes

No

New Quote

Oth

er S

uppl

ier



The table below summarizes general qualification criteria Strategic Sourcing uses to evaluate potential suppliers during the supplier qualification process outlined on the previous page. ON SEMICONDUCTOR’S SUPPLIER QUALIFICATION CRITERIA Strategic Sourcing evaluates direct material suppliers on five qualification criteria

Source: ON Semiconductor; Procurement Strategy Council Research (2006) In addition to general qualification criteria, ON Semiconductor requires suppliers to adopt recognized industry-standard quality systems such as TS-16949. ON Semiconductor’s Strategic Sourcing team implements the following practices to ensure potential suppliers meet product quality requirements:

• Communicate product quality requirements: Strategic Sourcing directs suppliers to an online supplier handbook that outlines the company’s supplier quality requirements. The handbook ensures suppliers comply with the company’s product quality standards both before and after contract signing. Additionally, supplier quality engineers inform individual suppliers of sample and data requirements and provide notification of final approval.

• Collect and review supplier self-assessments: Strategic Sourcing requires

all potential suppliers complete a quality system self-assessment based on the TS-16949 system and provide copies of quality certificates. Any issues identified are corrected prior to final supplier approval.

• Confirm sample products’ quality levels: Prior to the first shipment,

Strategic Sourcing implements the product verification procedure to ensure material conformation to specifications. To enable high supplier quality, the function reviews supplier sample materials and manufacturing capabilities through three steps:

1. Conformance to specifications: To ensure new suppliers can

manufacture products to company specifications, Strategic Sourcing requires suppliers submit product samples for inspection.

Strategic Sourcing examines new direct suppliers’ quality standards through self-assessments and product inspections.

ON Semiconductor evaluates suppliers based on five standardized qualification criteria

Competitive Advantage Demonstrate potential competitive advantage on factors including cost, service, and technology Quality Systems Adopt recognized quality standards such as TS-16949 Service Levels Support and participate in ON Semiconductor’s key programs and initiatives Critical Products Either offer products or services critical to the firm’s operations or unavailable through existing suppliers Demand Management Capability Maintain financial resources and infrastructure to support current and future demands.



The function verifies material conformance to electrical, chemical, structural, and mechanical requirements.

2. Process capability: Strategic Sourcing conducts on-site quality

assessments of all new suppliers as a systematic examination of manufacturing, packaging, and shipment processes.

3. Product reliability: The Quality Department performs liability

tests to ensure supplier materials conform to required specifications and meet process and product requirements. These tests include accelerated life and application testing.

Once supplier product samples and manufacturing capabilities are inspected, Strategic Sourcing inputs all approved supplier information into a central repository called the Strategic Sourcing List. The repository enables Strategic Sourcing to identify approved suppliers for new sourcing opportunities and reduce the need to allocate resources to qualify additional suppliers. In addition to evaluating suppliers on consistent and objective qualification criteria, Strategic Sourcing inspects supplier product samples, performs on-site quality assessments, and tests product reliability. By incorporating material verification steps during the qualification process, Strategic Sourcing ensures new suppliers’ products conform to specification requirements.

ON Semiconductor conducts on-site quality assessments of all new suppliers.

ON Semiconductor performs several reliability assessments to ensure supplier products are durable.



APPENDIX A: CADBURY SCHWEPPES’ SUPPLIER PREQUALIFICATION QUESTIONNAIRE

Cadbury Schweppes has established a Vendor Approval Process for all new suppliers that uses the following detailed set of questions as part of the selection procedure. The prequalification questionnaire provides basic information on operations of the company and approach to issues of concern. Suppliers must meet minimum standards to conduct business with Cadbury Schweppes.2 1. MANAGEMENT & CONTACT INFORMATION

Scoring1.1 Please provide details of your company

1.2 Please provide details of your primary contact

1.3

Parent Company NameStreet AddressTownCountyPost CodeCountryWeb Site

TitlePhone

Web Site

Mobile/Cell Phone

Parent Company Details

FaxEmail

Primary ContactName

Post CodeCountry

Company DetailsCompany NameStreet AddressTownCounty

If you are completing on behalf of a subsidiary company, provide your parent company details below.

2. PREREQUISITES

Scoring2.1 1

2.2 1

2.3 1

2.4 1

0

Do you accept that any subsequent agreement could be based on the [company] "Standard Terms & Conditions"?

Do you accept the [company] "Confidentiality/Non Disclosure Agreement"?

Do you accept the "Operational Conditions of Supply" to [company]?

Do you agree to work towards the [company] "Ethical Sourcing Standard"?

Yes

Yes

Yes

Yes



3. OPERATIONS - Delivery, Quality, LocationScoring

3.1 Do you measure your delivery performance to your customers? 1

3.2 1

3.3 1

3.4

BRC Global Standard -- Food A Grade

BRC Global Standard -- Food B Grade

AIB Standard--Superior Rating

AIB Standard--Excellence Rating

IFS Standard--Higher Level

BRC/IoP Global Standard--Food Packaging 1B (food contact material)

AIB Food Contact Packaging Standard--Superior Rating

AIB Food Contact Packaging Standard--Excellence

Other

3.5 If other or several, please specify below (ISO9001:2000 by itself is not sufficient):

3.6

ISO9000-2000

Any others (please specify below)

None

3.7 If other, please specify below:

3.8 1

3.9 1

3.1 1

3.11 1

3.12 1

3.13 If Yes, provide details and current status of event(s)

3.14 Do you have the ability to specify which location produces supplies for [company] requirements? 1

3.15 1

3.16 1

3.17 Do you have someone responsible for quality in your organization?

3.18 Please provide his/her name, title, and function below:

Have you ever been involved in a voluntary withdrawal or mandatory recall regarding the materials to be supplied to [company]?

As part of a formal programme do you document reasons for delivery failures and have action plans in place to prevent underlying problems from recurring?

Do you have a documented policy/procedure that states that you will notify customers in advance if their requested delivery dates will be missed?

Please indicate which third-party certification/audit approval you have or are committed to achieving within 18 months from these [company]-approved programmes?

To which recognized quality management systems are your operations certified?

Do you operate a documented quality-management system which covers the manufacture and supply of the product/service under consideration?

Do you comply with the food regulations applicable in both the country of origin/production and the country of sale?

Do you have a formal and current business continuity/disaster recovery plan(s) in place that are available on request? Note: These plans should address both recovery of production capacity, product recall / withdrawal, and continuity of service.

Does your organization maintain an active and formal Incident Management Team to deal with product integrity issues?

Can you demonstrate traceability of products produced by batch or lot forward to your customer ?

Can you demonstrate traceability of the raw materials used to produce products by batch or lot back to your supplier?

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes



Scoring4.1 Please provide your Dun & Bradstreet number (if known)

4.2 Please provide your Dun & Bradstreet ratings (if known) D&B ratingD&B failure score

4.3 Please provide the the following financial information for the last three financial years

£ Sterling £ Sterling £ Sterling

(Please attach your last 3 years financial accounts)

4.4 Do you hold the following insurance cover?Per claim Aggregate£ Sterling £ Sterling

1

1

1

1

1

4.5

£ Sterling £ Sterling £ Sterling

1 1

1 1

1 1

1 1

(Please provide written proof of cover from your insurer/broker)

4.6 Does your recall insurance provide the following

1 1

1 1

1 1

1 1

4.7 Is your organization currently involved in any claims and/or litigation? 1

4.8 If Yes, provide details below:

Public Liability Product

Accidental Contamination

Malicious Tamper

Yours Ours

Please State Base Currency Used

Please State Exchange Rate Used

Please State Base Currency Used

Please State Exchange Rate Used

Third-Party Property in Custody and Control

Expiry

Public Liability/ General Third Party Liability

Product Liability

Sub limit

Employer Liability

Professional Indemnity Insurance

Product Recall Insurance

Please provide details of your insurance cover extensions

Recall costs

Limit of Indemnity

Financial Loss

Contractual Liability

Indemnity to Principal

Current LiabilitiesPlease State YearPlease State Base Currency UsedPlease State Exchange Rates Used

4. FINANCIAL/INSURANCE/LEGAL INFORMATION

Loss of Profits/Consequential Loss

TurnoverPre-Tax ProfitCurrent Assets

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes



Scoring5.1 Specify country for location producing supplies for [company] requirement:

5.2

5.3 Specify the country where you buy raw materials used to make supplies for [company]:

5.4

5.5 Has your company been charged with/fined for any infringements of national legislation in the last three years? 1

5.6 1

5.7 If yes, provide details below:

5.8 If yes, do you track your performance? 1

5.9

Self-assessment

Customer assessment

None(Third-party includes SA8000/ETI, etc.)(Please provide copies)

5.10 1

5.11 Who is responsible for EHS issues and performance in your company? (Please provide contact details).

5.12 1

5.13 Do you have a documented management system to manage EHS issues? 1

5.14 Do you keep accident statistics? 1

5.15

5.16 Have the health and safety risks for your company been formally assessed? 1

5.17 1

(Lost Time Injuries are those which are serious enough to cause an employee to be away from work)

Against which standard has your business undergone an assessment or audit of your ethical sourcing practices?

([Company] EHS policy attached -- please provide copies of yours)

Do you track your usage of energy (electricity, gas, oil, coal) and water at each site?

Do you have one EHS (Environmental and Health & Safety) policy or separate Environmental and Health & Safety Policies?

If yes, please provide your accident statistics (total number of accidents and LTIFR - Lost Time Injury Frequency Rate per 200,000 manhours) for last year:

5. ETHICAL SOURCING STANDARDS - Environment, Health & Safety/ Human Rights and Ethical Trading/ Sustainable Agriculture/ Bribery and Corruption

Do you have a policy covering some / all issues included in the [company] "Ethical Sourcing Standard" that you implement with your suppliers?

EHS (Environment, Health & Safety)

Do you maintain a register of the Environmental and Health & Safety laws that apply to your sites and operations?

Third-party assessment

If your answer is "Other," please specify. If you buy raw materials in more than one country, pelsae indicate the most important location in the previous question and others in this question:

If your answer is "Other," please specify. If your factories able to supply [company] are in more than one country, please indicate the most important location in the previous question and others in this question:

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes



5.18 1

5.19 1

5.20 1

5.21 1

5.22 1

5.23 1

5.24 1

5.25 1

5.26 1

5.27 Do you have a policy on fraud within your organization? 1

5.28 1

5.29 1

0

Bribery and Corruption

Do you have a policy on speaking up (whistle blowing) within your organization and/or do you provide a means for raising issues that could include criminal conduct/illegal activity, dishonesty - theft/fraud, environmental or safety concerns, integrity of financial reporting, conflicts of interest, regulatory compliance?

Has your company or have any of its officers, agents or employees (during the course of their duties in relation to the company) ever been or currently are, the subject of an investigation by a law enforcement/magistrate/custom agency/tax authority or any central/regional/local government authority?

Sustainable Agriculture (If Applicable)

Do you have a policy on sustainable agricultural practices for the raw materials you supply?

Do you have systems in place to protect related ecosystems, habitats, biological diversity and wildlife conservation in the growing areas of the raw materials you buy and/or supply?

Are you willing to give an undertaking that child labor is not/will not be used in your operations?

Are you willing to give an undertaking that no physical or degrading punishment is used in the workplace?

Do the working hours and remuneration in your organization meet local legal minimum standards and comply with local laws?

Do you have a policy covering diversity-related issues and provide employees with equal opportunities?

HRET (Human Rights & Ethical Trading)

Do you operate to an agreed Code of Practice with regard to ethical trading based, for example, on SA8000, Ethical Trading Initiative (ETI) etc.?

Do you recognize unions and / or allow alternative means of worker representation?

Are you willing to give an undertaking that forced labor is not/will not be used in your operations?

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

6.1 Please confirm that a copy of this questionnaire has been completed for all sites that might supply [company]. 1

6.2 Any other general comments

6.3 Signed

NamePosition in OrganizationDate

6.4 Appendices ([company] conditions, agreements, standards & policies) 0

1.1 1.2 1.3 1.4"Supplier User

Guide Pre-Qualification

Questionnaire"

"Insurance, Legal Information"

"Ethical Sourcing Standard"

"[Company] Approved Third-Party Schemes"

(If no, please confirm a separate questionnaire for each site)

6. OTHER - General comments, Appendices

Total Scoring

Yes



APPENDIX B: SALT RIVER PROJECT’S CONTRACTOR SAFETY MANAGEMENT PROGRAM QUESTIONNAIRE

Salt River Project (SRP) requires potential suppliers to complete the following pre-qualification safety questionnaire during initial registration. This document enables the Procurement Services and Risk Management functions to evaluate supplier risk based on safety compliance history and training programs to track and improve health and safety performance.

CONTRACTOR SAFETY MANAGEMENT PROGRAM (CSMP)

Pre-Qualification Safety Questionnaire

Omitting or reporting false information on this questionnaire could result in the disqualification or removal from the Supplier Information Database.

SRP reserves the right to conduct random or for-cause audits of the information stated in this questionnaire. Additional documentation may be requested by SRP to support statements made on the questionnaire.

Company Name Street Address City State Zip Company Web Address Name Title Signature: ______________________________ Date: Phone: Email Address:

THIS SECTION FOR SRP USE ONLY SRP Vendor #

Requested By:

Date

Submitted By:

Date

Scored By:

Date CSMP Score:

Reviewed By: (Safety Services)

Date Final CSMP Score:



CONTRACTOR PRE-QUALIFICATION SAFETY

QUESTIONNAIRE

Company / Safety Representative Name: Title: Mailing Address: City, State: ZIP: Phone Number: Email Address:

The Following Information Is:

Number of Employees Corporate

Subsidiary Local State National

REMEMBER This form MUST be completed and accompanied with all requested attachments for SRP

review prior to any consideration being given to any interested contractual party. If you need additional space, please see page 4 or attach additional pages.



A - SAFETY HISTORY

1. EXPERIENCE MODIFICATION RATE (EMR)

Provide Workers Compensation EMR for your company for the current year plus each of the previous three (3) calendar years for your company as determined by the NCCI.

YEAR EMR Comments

Current

2. OSHA NON-COMPLIANCE CITATIONS:

List the number of upheld OSHA Non-Compliance Citations received in the current year plus each of the previous three (3) calendar years. Provide an explanation of the nature of each citation and each corresponding monetary penalty.

YEAR No. Citations Upheld Please Explain (Attach additional sheets if needed)

Current

3. OSHA 300 Safety Information

Please provide data for the current year plus each of the previous three (3) calendar years.

3 Previous Calendar Years

Current Year (# of Months )

Total employee hours worked Number of Lost Time Accident/Illness Cases

Total days away from work due to Injury/Illness

Number of OSHA Recordable Injury/Illness Cases

Note: Most of this information is available on the OSHA logs.

ATTACHMENT 1: Attach a copy of your insurance carrier’s certified letter of experience modification rating for the current year and each of the previous three years.

ATTACHMENT 2: Attach a copy of your current year OSHA 300 log sheet and the OSHA 200/300 log sheets for each of the previous three years.



3 Previous Calendar Years

4. Number of Fatalities Current Year (# of Months: )

Number of Fatalities

Please provide detailed information for each fatality on a separate sheet.

B – SAFETY & HEALTH PROGRAMS

1. Does your company have a Substance Abuse Screening Program? Yes No

If “Yes”, does your program include: Pre-Hire Screening Testing? Yes No Post Accident Testing? Yes No Random Testing? Yes No

If “YES”, you may be required to submit a copy of your Substance Abuse Program.

2. Does your company have a written Occupational Safety and Health Program? Yes No

If “YES”, you may be required to submit a copy of your Occupational Safety and Health Program.

3. Do your work crews conduct daily pre-work Job Briefings (Tailboards) before the start of each shift/job?

Yes No 4. Does your company conduct valid Driver’s License Record Verification on ALL employees required to operate a company vehicle on the job? Yes No

If “Yes”, indicate when the verification is done, and with what frequency.



C – CERTIFICATION, SPECIAL TRAINING

1. Does your company document employee specialty certifications for specific trades, equipment or job functions (i.e., CDL, Crane Operation, Welding, etc.)? Yes No

If “Yes”, list the types of specialty certifications maintained in your company files.

Certifications

2. Have any of your employees completed OSHA 500 or OSHA 501 training? Yes No Comments:

3. Have any of your employees completed OSHA 10-Hour or OSHA 30-Hour Training?

Yes No Comments:

4. What other training have your employees completed? (For example, the Southwest Safety Training Alliance Program, Personal protective Equipment, Excavation/Trenching Safety, etc.)

Please identify the type and frequency of the training provided.

EXPLANATIONS Attach additional pages if additional space is required



ENDNOTES 1 Procurement Strategy Council. “Supplier Certification and Auditing Processes in the Consumer Goods Industry.” Washington, DC: Corporate Executive Board (December 2003). 2 Procurement Strategy Council. “Procurement Social Responsibility.” Washington, DC: Corporate Executive Board (March 2006).

THE RESEARCH PROCESS IN BRIEF

Project Aims and Research Methodology This document seeks to provide senior procurement executives with strategies for establishing comprehensive supplier qualification processes. Because it employs an abbreviated research process to maximize its timeliness, this project (by design) does not provide an exhaustive evaluation of the problem or the practice. Looking forward, the Procurement Strategy Council plans to periodically update this collection as new practices and insights emerge.

While this report describes the opinions of experts and others regarding an issue of key strategic concern, we cannot emphasize enough that (consistent with our charter) we are not recommending any particular course of action.

This document is compiled from extensive primary and secondary research completed by the Procurement Strategy Council.

Professional Services Note: This project was researched and written to fulfill the specific request of a single member of the Procurement Strategy Council and as a result may not satisfy the information needs of other members. In its short answer research, the Procurement Strategy Council refrains from endorsing or recommending a particular product, service or program in any respect, nor to provide an exhaustive solution framework for the underlying problem. Sources are contacted at random within the parameters set by the requesting member, and the resulting sample is rarely of statistically significant size. That said, it is the goal of the Procurement Strategy Council to provide a balanced review of the study topic within the parameters of this project. The Procurement Strategy Council encourages members who have additional questions about this topic to assign research projects of their own design.

Project Aims

Research Methodology

cfo establishing comprehensive supplier qualification processes key findings

Documents