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Sertus Supplier Ratings (SSR) are used to measure the capacity and capability of suppliers across a multitude of industries. The purpose is to be able to standardize supplier competency and compare factories from different backgrounds. Sertus uses these ratings, together with price quotes and other considerations, like location and logistics implications, to assess the attractiveness of quotes. The rating system is based on a score of up to 800 points and is subsequently adjusted to a 10 point scale for ease of use.
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Sertus Supplier Ratings
Sertus LLC. © 2011
www.asiatradepro.com
Jay Peirce Sertus Supplier Ratings (305) 215-3414 September 2005 [email protected]
A Supplier Rating System
Sertus Supplier Ratings (SSR) are used to measure the capacity and capability of suppliers across a multitude of industries. The purpose is to be able to standardize supplier competency and compare factories from different backgrounds. Sertus uses these ratings, together with price quotes and other considerations, like location and logistics implications, to assess the attractiveness of quotes. The rating system is based on a score of up to 800 points and is subsequently adjusted to a 10 point scale for ease of use. Sertus ratings contemplate a wide array of criteria and the methodology has grown in sophistication over the years as we continue to refine the system to accurately reflect changes in industry practice. Our ratings are based mostly by information furnished by the supplier being reviewed, although there are many pieces of information that we obtain independently. Sertus assigns a rating only when there is adequate information available to form a credible opinion, and only after applicable quantitative, qualitative, and legal analyses are performed. The Analytical Framework The analytical framework is divided into several categories to ensure that salient qualitative and quantitative issues are considered. Proper assessment of the capability of any supplier under evaluation includes a thorough review of business fundamentals, including an examination and scoring of several criteria that measure the survivability of the entity and ultimately the capacity to absorb refunds in any potential dispute that might arise. Our assessment involves an analysis of the supplier’s vulnerability to technological change, labor unrest and regulatory action. Industries that have long lead times or that require a fixed plant of a specialized nature face heightened risk. We review management experience, effectiveness, and oversight. A
thorough analysis of all operating procedures are included in our rating system and we pay particular attention (and scores are weighted accordingly) to quality assurance and quality control procedures and equipment, both for inbound receipts of raw materials and inputs as well as for in-process and finished goods inspections. International trade capacity and experience is ascertained as well as experience with destination market norms, standards and other import criteria. The rating system accounts for certifications (e.g. ISO9001, OHSAS18001, CSR, COC – Code of Conduct, FSC, PEFC, BSCI, SEDEX, SEMTA, ETI, SA8000, ICTI, C-TPAT, GSV, Wal-Mart FCCA, etc.) and scores are adjusted to reflect years in compliance. Sertus also considers references from existing clients as very important. We look closely at the type and length of relationships that are maintained by entities under review. Product innovation scores are tabulated and concentration risk is also considered. The Ratings Process Ratings are required for any factory with which Sertus is currently working or where a working relationship is anticipated. A factory audit is performed and all information gathered during the audit is captured in our audit database. A ratings scorecard is completed and the factory rating is calculated. Ratings must be approved by our Ratings Committee and once approved are uploaded into the Ratings Database. All ratings for active suppliers are reviewed at least on a yearly basis unless a material change in condition would warrant a more frequent review. Use of Ratings SSRs are utilized to assess the attractiveness of quotes received by existing and prospective suppliers. In determining selection of primary and secondary suppliers for a particular product, Sertus
Jay Peirce Sertus Supplier Ratings (305) 215-3414 September 2005 [email protected]
will also review other criteria that are not specifically incorporated into the SSR. The rating will help determine the overall overhead transferred in (OTI) on a particular piece of business. For example, factories offering a low price but that score low SSRs will require a higher OTI due to greater QA/QC resources that are needed to ensure on-time delivery. The OTI adjustment to price may no longer make the “low price” supplier the most attractive alternative. There are also other elements that impact the OTI, like factory location (which impacts the direct expense of sending QA/QC personnel for inspections, the inland freight expense to get product to port etc.) or other services that Sertus may be required to attach to an order because the supplier is not capable of including them or not capable of meeting Sertus standards for these services (e.g. printing, artwork design, etc.). For more information, please contact [email protected] or visit www.asiatradepro.com
