Supplier management according to ISO 9001

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Flexibility and short delivery times with consistent quality are just some of the challenges facing companies today. Holistic supplier management is both the basis and the prerequisite for corporate success - because it ensures uniform standards, creates transparency about opportunities and challenges, and contributes to the development and expansion of business relationships. In this article, you will find out what role ISO 9001 plays in supplier management and how companies can best secure cooperation with their suppliers.  

Table of Contents:

  1. What is ISO 9001?
  1. What is supplier management? Meaning
  1. How does ISO 9001 affect supplier management?
  1. How do companies implement ISO 9001 in supplier management?
  1. How can the cooperation with suppliers be regulated?
  1. Successfully implement ISO 9001 and relationship management

What is ISO 9001?

The international standard EN ISO 9001 defines the minimum requirements for quality management. It is intended to improve the performance of a company at all levels, including supplier management. Essentially, 7 principles apply:

  • Customer orientation
  • Management and leadership
  • Inclusion of people
  • Process-oriented approach
  • Improvement  
  • Fact-based decision making
  • Relationship Management

Accordingly, every company that outsources parts of its value chain to external service providers should ensure the performance of its suppliers through the standard - and by evaluating this against specific quality criteria. The focus of this continuous improvement process is on optimizing workflows and processes with regard to product quality and customer satisfaction.  

The last version of ISO 9001 was updated in the fall of 2015 with the aim of responding to the changing requirements of the markets, increasingly networked trade in the context of globalization, and the overall growing complexity of products and services. After a three-year transition period, the new ISO 9001 has now been in force since September 2018, which means that supplier certification has also been mandatory since then.

What is supplier management? Meaning  

In general, the term supplier management in logistics describes the systematic management of the relationships between a company and its suppliers. As a rule, it is located in the purchasing department and comprises various aspects which - depending on the company - are developed differently.  

In a company, supplier management assumes the following tasks, among others:

  • Selection of suitable suppliers into the supplier base
  • Implementation of supplier audits
  • Supplier evaluation
  • Performance monitoring  
  • Supplier development  

Supplier management is intended to establish a coordinated interface with external service providers and optimize the company's own value chain by comparing different suppliers. A constant analysis of new suppliers makes their services comparable and helps with economic process optimization and cost reduction.  

The aim of professional supplier management is to build up and maintain a competent supplier base whose members are characterized by reliability, performance, continuity and readiness to deliver.

How does ISO 9001 affect supplier management?

Section 8.4 of DIN EN ISO 9001 stipulates that companies must monitor the quality of externally provided services and products. Thus, this point mainly concerns the cooperation with suppliers, for which the company must define appropriate criteria. The processes in supplier management include the selection of suitable suppliers, the assessment of suppliers and their performance monitoring, and supplier development.

Supplier selection  

Before a cooperation between the company and its suppliers takes place, the company must carry out a supplier selection. Among other things, the focus is on the question of which requirements a supplier must fulfill in order to qualify as a supplier for the company. It must also be determined how the company checks and documents the implementation of these requirements.

Supplier evaluation and performance monitoring

The evaluation and performance monitoring of external service providers is about when and how this is to be done, which criteria are to be used as a basis and according to which specifications and contents audits of the business partners are to be carried out.

Supplier development

The next step in supplier development is to draw conclusions from the findings of the supplier evaluation: Which measures are defined and implemented? At what point does a re-evaluation take place within the framework of supplier management? It should also be determined which performance deviations lead to a separation of partners and suppliers, when and how.

The international standard EN ISO 9001 defines the minimum requirements for quality management.

How do companies implement ISO 9001 in supplier management?

Although ISO 9001 requires that companies define and implement criteria for supplier selection and evaluation, it does not provide clear specifications as to what exactly such a selection must look like. For smaller companies, it may be sufficient to divide suppliers into certain classes or groups. For large companies, on the other hand, such a division can quickly become time-consuming.

To ensure that the effort is not too high, but that the assessment is nevertheless well-founded, companies should define around ten criteria. These include, for example:

  • Quality of delivered products, services and additional services
  • Price of purchased products and services
  • Competencies regarding delivery quantity and date as well as delivery flexibility  
  • Risk potential of possible supplier default  
  • Consequences in case of non-compliance
  • Trust and reliability within the framework of cooperation
  • Dependence of the company on the supplier
  • Process quality of the supplier

Supplier selection and evaluation is no longer just about controlling the actual products, but also the associated (supply) processes, which can best be implemented by logistics.

How can the cooperation with suppliers be regulated?

If a company wants to work with a supplier on a long-term basis, it should contractually define the details of the cooperation - especially with regard to the requirements of ISO 9001. This is made possible by a so-called quality assurance agreement (QAA). This stipulates in detail what the supplier must contribute to quality assurance and which requirements he must adhere to. The provisions of the QAA are comparable to the company's general terms and conditions or purchasing conditions.

The QAA should regulate the following points:

  • Goals of cooperation (regarding quality assurance of products, services and processes)
  • Consequences in case of misconduct (with reference to regular supplier audits)
  • Practiced quality management system by the supplier (with documentation)
  • Information obligations (in case of non-compliance with agreements or quality defects)
  • Implementability (checking whether the supplier can implement the specifications at all)
  • Qualification of employees (agreement on the use of specially qualified personnel)
  • Approval and release (of products, services, processes, methods, equipment)
  • Measures to be taken in the event of quality defects (including immediate obligation to inform and rectify defects)
  • Review of the quality management system by the company  
  • Continuous improvement (for example through audits)

Successfully implement ISO 9001 and relationship management

DIN EN ISO 9001 certification creates confidence in the quality and performance of your products and services. When it comes to the topic of quality and supplier management, it is the same as with software: Every single employee must be convinced by the system - otherwise the introduction will not achieve the desired success. In order to distribute the optimal improvement tactics to all areas of the company, all employees in the company should therefore be integrated into the planning processes.

But it is not only in the context of supplier management and ISO 9001 that cooperation between the various players and partners plays an important role - but along the entire value chain. Professional quality management can only be guaranteed if suppliers, forwarders and employees are networked and informed about the processes taking place.

This is made possible by TradeLink's cloud-based platform: With our software, you benefit from maximum transparency along the entire supply chain through the highest data quality. All involved stakeholders can track the status of suppliers in real time - whether purchasing, logistics or sales. Since TradeLink's software is optimized for any device, it does not matter where employees or suppliers are located.

Simplify delivery coordination now

Benefit from measurable success for inbound and warehouse logistics - thanks to 100% transparency on supplier and service provider performance with TradeLink's most effective form of delivery reconciliation. Have we made you curious? Then contact our experts for a personal introduction to our software.

Upstream processes can thus be coordinated quickly and easily with logistics. The partial automation and simplification of all coordinative tasks can significantly increase the productivity of site logistics - and save up to 30 % of costs in incoming and outgoing goods processes.

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