In today’s globalized economy 🌐, selecting and evaluating suppliers is one of the most important tasks you have. It’s not just about finding the best price 💰, it’s also about making sure your suppliers are reliable and deliver the quality you need.

⏳ Business information: A look into the past

Credit reports are an important tool for evaluating suppliers. They give us an insight into the financial stability of a company and can help us to identify potential risks. But they are not perfect. They show us a glimpse into the past and not the current or medium-term situation of a company. Therefore, they should only be considered as one part of the overall valuation process.

📝 Contracts: A limited degree of certainty

Contracts offer a certain degree of security, especially in international transactions. They set out the terms under which business is conducted and provide a legal framework for dealing with disputes. But they cannot cover all risks, and they cannot guarantee that a supplier will always be able to fulfill its obligations.

🔄 Continuous evaluation of delivery performance

The continuous evaluation of delivery performance is another important aspect of supplier evaluation. Through regular reviews, we can ensure that our suppliers keep their promises and deliver the expected quality. But there are limits here too. Even detailed 8D reports will not solve the core of the problem. It is important to look beyond the symptoms and identify the underlying causes.

🔑 “The hidden factory”: the key to quality assessment

As part of audits, it is important to assess “the hidden factory”. This is the quality level of the factory, which often remains hidden behind the scenes.

• Is the factory aware of the main problems? 🤔
• Are the problems delimited in terms of time and space? 🕰️🌍
• How are the problems measured? 📏

These questions are crucial for assessing the ability of a supplier or factory to deliver consistent quality.

🌿 The Corporate Sustainability Due Diligence Directive (CSDDD)

The latest developments at EU level, in particular the provisional agreement on the Corporate Sustainability Due Diligence Directive (CSDDD), have far-reaching implications for supply chain assessments. The CSDDD obliges companies to identify and avoid negative impacts of their activities on human rights and the environment along their supply and value chains.

•  Scope of application for companies with at least 1,000 employees and an annual net turnover of 450 million euros. 💼
• Transition period of 5 years, with gradual introduction from the 3rd year for companies with at least 5,000 employees and a net turnover of 1.5 billion euros. ⏰
• Companies must identify risks and adverse effects on the environment and human rights in their own business area and with regard to their business partners. 🌍👥
• They must take preventive and remedial measures and report publicly on their due diligence obligations. 📢
• Large companies with more than 500 employees are also required to draw up a climate plan documenting that their corporate strategy is aligned with the 1.5 degree target. 🌡️
• Violations of the directive can result in fines of up to 5 percent of the company’s net turnover. 💸
• According to the CSDDD, companies can be liable under civil law. Those affected can therefore demand compensation if the duty of care is breached. ⚖️

This means that audits and the assessment of the “hidden factory” must now also take the CSDDD into account. SMEs should also use this as a benchmark. 📊

Now is the time to act. Start implementing these practices in your company today. Review your existing suppliers, evaluate new potential partners and make sure you have full control over your supply chain. Remember, a strong supply chain is key to the success of your business. 🔑🚀