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Making the right choice of supplier for any part of your organization is critical. Get it right, and you can build a lasting, mutually beneficial relationship. Get it wrong, and the results can be both costly and disruptive.
You might find a supplier that offers a good price, but later realize that the quality of their products do not meet your expectations. Or maybe they don't keep you up to date with the progress of your orders.
Mismatches between your procurement needs and what a supplier offers can add costs, cause delays, and even damage your organization's reputation – for example, if the equipment or resources supplied are substandard.
In this article, reviewed and endorsed by the model's originator, Dr Ray Carter, you can learn how to use the 10 Cs of Supplier Evaluation to identify your organization's needs, understand how suppliers can meet them, and choose the right supplier for you.
Defining The 10 Cs
Dr Carter, director of DPSS Consultants, first outlined his Seven Cs of Supplier Evaluation in a 1995 article in the Journal of Purchasing and Supply Management. He later added three new Cs to the model. [1]
The 10 Cs are criteria for assessing the suitability of a potential supplier. Use them as a checklist when deciding who to approach, and who to avoid. They are:
- Competency.
- Capacity.
- Commitment.
- Control.
- Cash.
- Cost.
- Consistency.
- Culture.
- Clean.
- Communication.
This model was first published in the Journal of Purchasing and Supply Management, Carter, R., 'The Seven C's of Supplier Evaluation,' 44-46, © Elsevier (1995). Model reprinted with kind permission of Dr Ray Carter.
Using the 10 Cs in Procurement Management
Carter's 10 Cs can form the basis for a strong Procurement Management policy. They help you to evaluate potential suppliers in the areas that matter to you, and can greatly improve your supply chain management. Bear in mind also, that with the more agile and gig economy prevalent today, suppliers might well be micro or Small to Medium Enterprizes (SMEs) and not just big corporates.
First, you can use the 10 Cs to analyze different aspects of a supplier's business: examining all 10 elements will give you a broad understanding of the supplier's effectiveness and ability to deliver.
If you have only a few suppliers to assess, and you want them to excel in all 10 Cs, you might quickly eliminate all of them. To avoid this, use a grid-based tool such as Decision Matrix Analysis to score each supplier against each of the 10 Cs. Then choose the supplier that scores best against the conditions that are most important to you.
Remember to double-check the areas where the supplier is weak – some of these could make a relationship impossible.
The checklist can also help you to negotiate a better price. For example, if you identify a particularly weak area in a supplier, you can use this insight to bargain for a lower price – especially if you perceive that the supplier's weakness poses a risk for your firm, and you need to take action to minimize this risk.
Tip:
You can adapt Carter's 10 Cs checklist to outline your organization's needs in a tendering process. Use each of the elements to state the standards that you want your bidders to meet.
The 10 Cs Model in Detail
It's worth putting a lot of effort into supplier evaluation for business-critical resources, for situations where you will be spending a lot of money, or where you want a long-term relationship with a supplier.
When you research a supplier, prepare probing questions – ones that will reveal the level of detail that you need to make an informed decision. Where possible, talk to existing customers as well as the suppliers themselves.
In the following sections, we look at how you can apply Carter's 10 Cs model to find the supplier that will best fit your organization's needs and values.
1. Competency
First, look at how competent the supplier is. Make a thorough assessment of their capabilities, and measure them against your needs. Then look at what other customers think. How happy are they with the supplier? Have they encountered any problems? And find out why former customers changed supplier.
Look for customers whose needs and values are similar to yours, to ensure that the information you gather is relevant to your organization.
2. Capacity
The supplier needs to have enough capacity to handle your company's requirements. So, ask how quickly they will be able to respond to your needs, and to market and supply fluctuations.
Look at the supplier's resources, too. Do they have the means to meet your orders, taking into account their commitments to other clients? (These resources could include staff, equipment, storage, and available materials.)
3. Commitment
Your supplier needs to provide evidence that they are committed to high quality standards. Where appropriate, look for quality initiatives within the organization, such as ISO 9001 or Six Sigma.
The supplier must also show they will be committed to you, as a customer, throughout the time that you expect to work together. (This is particularly important if you're planning a long-term relationship with them.)
Look for evidence of their ongoing commitment to fulfilling your requirements, whatever the needs of their other customers.
4. Control
Ask how much control this supplier has over their policies, processes, procedures, and supply chain. How will they ensure that they deliver consistently and reliably, especially if they rely on scarce resources, and if these resources are controlled by another organization.
It is also vital to ask about their compliance with the General Data Protection Regulation (GDPR), which is essential for any organization that works in, or has partners in, the European Union (EU).
5. Cash
Your supplier should be in good financial health. Cash-positive firms are in a much better position to weather economic ups and downs.
So, does this supplier have plenty of cash at hand, or are they overextended financially? And what information can the supplier offer to demonstrate their ongoing financial strength?
6. Cost
Look at the cost of the product or service that this supplier provides. How does it compare with the other options that you're considering?
Most people consider cost to be a key factor when choosing a supplier. However, cost is in the middle of the 10 Cs list for a reason. Other factors, such as a commitment to quality and financial health, can potentially affect your business much more than cost alone, particularly if you plan to rely on the supplier long-term.
7. Consistency
How will this supplier ensure that they consistently provide high quality goods or services? Do they have a strong track record, or are they an industry newcomer with an innovative approach?
No one can be perfect all the time. However, the supplier should have processes or procedures in place to ensure consistency. Ask potential suppliers about their approach, and, if possible, get a demonstration and a test product.
8. Culture
The best business relationships are based on closely matching workplace values. This is why looking at the supplier's business culture is important. For example, what if your organization's most important value is quality, and your main supplier cares more about meeting deadlines? This mismatch could mean that they are willing to cut corners in a way that could be unacceptable to you.
Look out for suppliers that have received recognition within the industry for their cultural excellence, and use the Cultural Web to help identify the organization's values.
9. Clean
This refers to the supplier's commitment to sustainability, and their adherence to environmental laws and best practices. What are they doing to reduce their environmental footprint? Ask to see evidence of any green accolades or credentials they have earned.
Also, does this supplier treat their people – and the people around them – well? Do they have a reputation for Corporate Social Responsibility, and for doing business ethically?
10. Communication
Find out how the supplier plans to keep in touch with you. Will their proposed communication approaches align with your preferred methods? And who will be your contact at this firm?
It's also important to find out how the supplier will handle communications in the event of a crisis. How quickly will they notify you if there's a supply disruption? How will that communication take place? And will you be able to reach senior people, if you need to?
Communication is particularly important if you're managing day-to-day functions that you outsource, or if you're dealing with freelancers or consultants who provide core services.
Tip:
When you're researching suppliers, keep all of the information you generate in writing – particularly queries aimed directly at the supplier. This will mean that it's "on the record," so you can refer back to it later if there's a problem.
Key Points
Ray Carter first developed his Seven Cs of Supplier Evaluation in 1995. He later added three more Cs.
You can use this model to evaluate the competency and viability of potential suppliers. This allows you to choose the firm that best meets your needs, and that aligns with your organization's values.
The 10 Cs are:
- Competency.
- Capacity.
- Commitment.
- Control.
- Cash.
- Cost.
- Consistency.
- Culture.
- Clean.
- Communication.
