"Supplier pre-qualification refers to the qualitative and quantitative evaluation and approval process, based on aspects such as financial ratios, certifications and other background information. This helps us to know the risk exposure of our possible candidate for goods and services," said Nicolás Avellaneda, regional director in Latin America for Achilles, at Heading to PERUMIN.
He mentioned that 15 years ago, 99.9% of suppliers used a simple commercial market report to enter into a contract with a company. It was enough to know that the supplier was not in danger of bankruptcy to close the contract. But now the opposite is true.
"Today 99.9% of purchasing companies carry out very in-depth procedures to know the profile of their potential supplier down to the last millimeter. With a simple Google search, they can review the supplier’s history and if they find out that the supplier has had any corruption problem or any other minor problem, they will rule them out," he said.
In a context in which mining companies in Peru have reduced their average turnover from S/ 81.4 million (2019) to S/ 51.4 million (2020), the pre-selection criteria still continue to be one of the most efficient tools for the recruitment of suppliers that add value to the supply chain of their clients.
In this sense, Nicolás Avellaneda highlighted that only 25% of supplier companies in Peru have certified quality management systems and that a total of 26 suppliers have been doing business for at least 10 years.
"If the supplier does not have a quality rating for any of its functional areas, it will have to take actions to improve; otherwise, it will be replaced by another competitor and it will be more difficult for it to return to its former client", he said.
More detailed information on suppliers
Furthermore, the Achilles representative stated that buyers are requesting more specialized information to know the real situation of the supplier candidate in new areas such as cybersecurity, environment, ethical business and quality, and health and integrity. "These information requirements have grown 160% in the last 5 years," he said.
He also recommended that buyers apply supplier pre-selection criteria during the supplier search stage, and not when they have reached more advanced stages such as adjudication, because at that point there is little time to re-evaluate the candidates and even run the risk of canceling the entire bidding process.
"10 years ago, the volume of information gathered in a supplier evaluation process was negligible compared to today. The government, regulations and society in general are demanding that companies have certain compliance requirements that generate a supplier qualification with more and more parameters," concluded Nicolás Avellaneda.