Supplier Evaluation in Pharmaceutical Industry

According to Hald and Ellegaard (2011), supplier evaluation is

"The process of quantifying the efficiency and effectiveness of supplier action."

Organizations conduct supplier evaluations both to qualify the potential suppliers and to assess relationships with the existing ones. Supplier evaluation represents one of the most important decisions in a company to remain competitive, especially in times like now when markets are changing very fast.

What is Supplier Evaluation?

In procurement, supplier evaluation means a formal assessment of suppliers to measure their performance against various criteria and determine if they meet the organizational needs.
The objective is to create a best-in-class and low-risk portfolio of available suppliers for use.

Supplier evaluation is a continuous process for procurement and Quality departments and is also a pre-qualification step in the process of purchasing and qualifying the suppliers.

Some of the benefits of supplier evaluation include:

Risk mitigation:
By carefully examining suppliers, you can lower the regulatory, contract, and security risk factors associated with working with systems outside your company.
Enhanced supplier performance:
Enhanced supplier performance directly correlates with the overall performance of the procurement process.

Cost reduction:
Supplier evaluation is a significant process for any organization because it directly influences the quality and cost of purchased products. Also, a slight gain in cost and quality due to supplier selection has significant benefits for organizations.
Leveraged supply base:
Evaluating supplier performance helps organizations set a standard, and this, in turn, leads to superior results.

Strengthened supplier relationships
Efficient supplier management encourages communication, collaboration, and loyalty, which lays the foundation of mutually beneficial working relationships that benefits everyone in the long run.
Improved business outcomes
Engaging top suppliers will enable you to provide higher-quality and more competitively priced goods or services.

Supplier Evaluation Process

Supplier assessment is a multi-criterion problem that includes both qualitative and quantitative factors. That is why developing standard selection criteria and applying them indiscriminately to any situation does not suffice.

That said, supplier evaluation criteria should align with your company's mission, vision, and business goals.
Additionally, it should also include factors like quality, cost and financial integrity, corporate social responsibility, communication, and cultural commitments.

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Resource Person: BARBARA PIROLA

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