Many companies and organizations pre-qualify their suppliers either before or during a tender process with the aim of limiting the number of possible suppliers. It is an essential step to deciding whether a supplier is capable of supplying the required goods and services at an acceptable price, in the timeframe required, and of the right quality. If the supplier meets the pre-qualification criteria, the supplier is invited to tender or to negotiate for the purchasing organisation's business.
There are
two steps to pre-qualification: finding suitable suppliers and verifying their
credentials. Finding suppliers includes identifying
possible sources of supply that have both the ability and capacity to provide
the commodity. Verifying suppliers
requires that you set a standard and then score the supplier against this
standard. The extent of any verification exercise depends on how critical the
commodity required is as there are time and expense considerations.
Using a
questionnaire to pre-qualify suppliers
You are looking for eligibility, capability,
experience and past performance. This document should be comprehensive and
include most of this information for each supplier:
• his company name, type of business, legal status, ownership, organisational
structure, locations and basic contact details
• the products and/or services the supplier can provide
• certifications and quality management policy
• current major clients or customers in your industry
• whether the supplier is a distributor or manufacturer
• details of any other contracts with your company (if applicable)
• environmental, ethics, occupational health and safety policies
• audited financial statements for the last three years
• their policies related to corporate social responsibility such as
sourcing from low-cost countries and using child labour
Your
pre-defined minimum standard for each of the above criteria will define if your
supplier passes the first phase. It is permissible to ask the supplier to
declare any possible conflict of interest such as any existing business
relationship with any of your employees.
The
supplier can be pre-qualified for a given period or for a specific tender
only. Often a supplier is pre-qualified
to provide a particular item, category of products, or services and excluded
from providing other goods or services.
Next step –
site visit
It is good practice to undertake a site visit even
if you are sourcing a service. It allows
you to verify:
• the
actual locations of the supplier’s business premises
• whether
the supplier is duly registered and licensed
• the
level of competence of technical skills and the management
•
condition of the suppliers premises and equipment
• health,
safety and environmental conditions
Pre-qualification cannot prevent you selecting a
supplier that fails to fulfil obligations but it can help in filtering out some
suppliers that would definitely be the wrong choice. The aim is to achieve some level of comfort
taking into account technical and management capabilities,
financial strength and previous successes.
Contributed by: Elaine Porteous - a freelance
procurement and contracts specialist – dugport@icon.co.za
