A contract or framework
agreement supplier service specification establishes an organisation’s product
and service offering. It is strategically crucial that supplier specifications
define what an organisation requires of its suppliers regarding product quality
and service standards to maximise profitability and minimise its commercial and
legal supply risks.
Recently awarded supplier
framework agreements correctly specified that an independent living alarm call
installer was obligated to rectify fire compartmentalisation infringements and
that a grounds maintenance contractor was liable for litter clearing before
mowing lawns.
A UK distributor signed a
dealership agreement to import and distribute European-manufactured heavy
industrial equipment within the UK. The contract required the distributor to
import and configure the equipment according to all UK legislation, quality
standards, codes of practice, and health and safety requirements.
However, the distributor
failed to ensure that supply contracts were instigated for its UK-sourced and
installed heavy industrial equipment attachment and accessories suppliers,
resulting in the following:
- Heavy industrial equipment was
CE-compliant when imported, but was sold to customers without CE
compliance when adapted for the UK market. There was a failure to specify
contractual supplier quality and legal or quality management system
standards to ensure the safe installation, maintenance, and use of
UK-sourced and installed attachments and accessories.
- UK-sourced and installed safety
barriers and guide rails failed prematurely, putting equipment operators
in danger of death or severe injury. The safety barriers and guide rails
were neither subjected to UK safety testing nor endorsed by the heavy
industrial equipment manufacturer. It placed a substantial risk of
prosecution and unlimited commercial liabilities for fines
under the UK health and safety legislation upon the distributor for
marketing untested safety equipment.
- A UK supplier severely compromised
the integrity of “rollover protection systems” (ROPS) when incorrectly
fitting a fire suppression system. The distributor failed to seek the
approval to install UK-sourced attachments and accessories from the heavy
industrial equipment manufacturer, facilitate or specify
manufacturer-compliant model-specific installation or maintenance manuals
or make the installation and maintenance manuals available to customers,
increasing the risks of premature ROPS and safety equipment failure.
When engaging suppliers,
organisations have a duty of care to specify what they require of the supplier
in terms of the products and services to be provided and to detail what quality
and legislative standards and service levels are to be applied to the supply of
products and services. Organisations must mitigate their commercial and legal
supply risks by having the appropriate coordinated customer/supplier
contractual specifications in place. Otherwise, those risks will be carried by
the organisation.
Additional articles can be
found at Supply Chain Management Made Easy. This site looks at supply
chain management issues to assist organisations and people in increasing the
quality, efficiency, and effectiveness of their product and service supply to
the customers' delight. ©️ Supply Chain Management Made Easy. All rights
reserved.
