Key learning outcomes:

  • Describe the evaluation methodology devised by Ray Carter in 1995.
  • Apply the 10 C’s whenever you change or appoint a supplier for your business.
  • Understand the importance of researching potential suppliers before entering into agreements.
  • Recognise that low cost and high quality may not go hand in hand.

Article:

Choosing between suppliers for your business can be daunting. Your choice of suppliers will often directly impact the level of service or the quality of product that you give your customer. For example, think about the printer who is faced with the late ink delivery or the restaurant that serves inferior quality food to its customers. As a business owner, you will need to make a number of decisions about suppliers, and it can be tempting to go with the one that offers you the best cost advantage. However, there are a number of factors that you need to consider before signing a contract or locking yourself into a long-term agreement. Ray Carter designed a system of supplier evaluation in 1995. His original model only contained 7 C’s, with three more added at a later date to make it the 10 C’s. Use this article in conjunction with the accompanying worksheet to help you to choose the most suitable suppliers for your business.

The 10 C’s

When evaluating a supplier you need to consider all the factors, or the 10 C’s, outlined below. We find the best way to do this is to give the supplier a score out of 10 for each of the 10 C’s. If you are evaluating more than one supplier, this will allow you to make a direct comparison. Use our worksheet, which is available to download at the top of the article.

Competency

This is a measure of how competent the supplier is. You need to look at their competency and match it with the needs of your business. Remember to ask for evidence to back up any statements or sales pitches that the supplier gives you. Ask to talk to some of their current customers and pay particular attention to businesses that are the same size or that have similar needs.[wlm_ismember]

Capacity

Does the supplier have the capacity to meet your needs and those of its other customers? Does the business have the resources to meet your needs? Would they still be able to supply you if there was a sudden increase in demand for their product or service? If you are concerned and it is a viable option, ask for a tour of the supplier’s operations and premises.

Commitment

Can the supplier provide evidence of its commitment to quality? Look for industry standards or quality certifications such as ISO 9001 Quality Management Systems. You also need to be sure of the supplier’s commitment to you. This is especially important if you think you are a small account for the supplier. Will they treat you the same as they do their larger clients?

Control

How much control does the supplier have over the resources it uses, along with their internal systems and processes? For example, if you wish to buy a finished product that is being manufactured by the supplier, what would happen if they were unable to source one of the materials needed? How quickly we would they be aware of this and do they have a back-up plan?

Cash

How robust is the supplier’s financial situation? Are they able to withstand an economic downturn? Look for any evidence available from the supplier. For larger companies, you may be able to access public information such as annual reports.

Cost

It is important to consider the cost of the product or service that you are evaluating and compare it with other potential suppliers. While cost is often the number one consideration for many businesses, Carter placed it in the middle of the list, as other factors such as quality control and competency can have a greater impact on your business. Sometimes going with a supplier that costs a little more will save you in the long run, when issues such as late supply or poor quality of goods are taken into consideration.

Consistency

Is the supplier able to deliver consistently over a period of time? Often suppliers will start by offering a high level of attention and service, only for this to drop off over time. Talk to longstanding customers or ask the supplier for evidence of how they ensure consistency in the quality of their services and products.

Culture

Does the supplier have the same or similar cultural values? You will be more likely to have a long-lasting and mutually beneficial relationship with a supplier that has the same values as you. For example, if delivering high customer service is one of your core values, but not your supplier’s, there will be a mismatch in what they deliver to you and to your customers. Other signs to look for are the atmosphere when you walk into the supplier’s premises, the way people speak to each other during these visits to the premises and how your questions are handled.

Clean

This refers to the commitment the supplier has to the environment and to sustainability. Do they operate in a way that demonstrates a “green” way of thinking? For example, how do they deal with issues such as wastage? It is also important to consider the suppliers ethical standards.

Communication

How will the supplier communicate with you? Will you have a dedicated contact person? Will they be in contact on a regular basis or only when you call them? Is the person you are dealing with an outbound salesperson? What will happen if you need immediate assistance? One of the features of a good supplier relationship is an open and satisfactory channel of communication.

Summary

By conducting an evaluation, using such methods as the 10 C’s, you will make effective decisions when appointing or changing suppliers. Remember that any information you gather needs to be considered in the context of your business’s needs. Your aim is to find the supplier that will best match the specific needs of your business. When completing the worksheet, you might decide to weight some areas more heavily than others. For example, consistency and capacity might be the most important C’s if you have a very regular supply; however, communication and culture might be the most important if you are dealing with low-volume but high-value products.[/wlm_ismember]

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