A story of Carter’s 10Cs, supplier appraisal and should I call the Home Office?
Here we’ll talk about how to choose suppliers, or supplier appraisal. Supplier appraisal ensures you find the right suppliers that fit your business and your goals.
There aren’t any best suppliers, just ones which are right for your company and the products you’re buying.
Carter developed the model in 1995 as a way to find the right suppliers. Each element needs to be assessed in relation to your own company, as each requirement and contract is different.
I like to split the 10 considerations into three groups:
- Company data that every company will need, regardless of the product or industry
- Product information that is related directly to what you want to buy
- Information to assess the cultural fit, and whether you’ll work well together
|Commitment||How committed to quality are they? Do they have ISO 9001 or similar?|
|Control||What’s the governance of the company and quality like?|
|Cash||Financial health check of the company|
|Competency||How do you assess that the potential supplier is good?|
|Capacity||Can they produce the amount that you need?|
|Cost||How do their prices compare to others, and what influences those prices?|
|Consistency||How do they make sure their products are consistently good quality?|
|CSR||Do their sustainability policies match your own?|
|Culture||Are you a good cultural fit?|
|Communication||How does the supplier communicate and what IT systems does it have in place?|
The UK confectionary market is valued at £44.7bn per year and has continued to grow throughout 2020, despite the pandemic.
Demand was high during the ‘Golden Ticket’ campaign, and whilst we can’t tell what the normal demand levels are like, there was certainly a lot of brand awareness around Wonka products.
Compared to other, more automated, confectioners, Wonka’s processes must be costly. Employment levels are high, with multiple Oompa Loompas required for each task in the factory.
Whilst I can’t access a Wonka credit check, the company should have plenty of cash operating in that sector.
As well as cash, the company needs to demonstrate that they have suitable control over their processes, with an adequate governance structure in place. There don’t appear to be any Health & Safety boards in the factory. There are opportunities for these to be displayed through the corridors, with a printed copy of the H&S policy as well as any updates or recent near misses.
Wonka Industries appears to have little understanding of English contract law, as there is a large contract signed by children on the wall. For a number of reasons, this would not be valid if brought to any court.
Another concern is that any company with a turnover of more than £36m has a responsibility to report on modern slavery within our supply chain.
Wonka Industries brought the whole population of Oompa Loompas from Loompaland to their factory. Supposedly, this was to protect them from a land of “desolate waste and fierce beasts,” but this seems like an example of modern slavery to me.
The Oompa Loompas sing that they “live in happiness,” but I’d like to see their employment contracts and be assured that they are paid fairly and are able to move freely. Wonka calls them by playing a whistle, which is not modern leadership practise.
A similar problem with the control of the company is that it’s heavily dependent on one individual – William Wonka. Rumour has it that he intends to pass the company over to a child, which is a concerning problem that could destabilise the company during any long running contract.
Wonka’s personal commitment to quality is without question. He was born to be a candyman, of course. However, I can’t think of an approving body that would award the company with an ISO 9001 certificate. The Invention Room in particular has very poor housekeeping standards and additions to the products include shoes, a coat and a clock. Wonka himself states that “invention is 93% perspiration,” which would not pass any food safety standards.
Wonka talks about trialling the three-course-dinner gum, but none of the quality tests seem repeatable enough to qualify for a full quality management system.
There are two options we could be buying here:
- A quantity of existing products
- A new development
A low-income, elderly grandfather was able to afford one of Wonka’s bars but at the expense of other luxury products. It appears Wonka’s confectionary is at a similar level to other products in the market.
However, there wasn’t any demonstration of a continuous improvement or learning curve cost reduction in Charlie’s factory audit. I don’t think anything is being measured closely enough for a six-sigma team to be working towards lowering costs for customers. This could be a concern if we were looking at a new development with a learning curve to reduce costs over time. Perhaps Wonka would be positive towards a lower cost in future once the upfront capital costs are paid off.
One demonstration of their competency is that Wonka is a historic company that has had many years of attracting loyal customers.
Wonka and his team are focussed on the production of confectionary, with the odd long-winded process for clearing the production plant of unwanted children who turn into blueberries.
His team are trained and coordinated, knowing exactly where they need to be at any time through the process.
However, the factory process seems unable to cope with exacting food standards requirements. There was no evidence of segregating contaminated product when a German boy fell into the chocolate river.
Capacity & Consistency
Wonka Industries has demonstrated the capacity to sell a large quantity of products during the Golden Ticket campaign. The factory’s chocolate river apparently flows at a rate of 10,000 gallons an hour, or (assuming no bottlenecks in the rest of production and packaging) 1.3m chocolate bars per hour.
I’d be interested to know the company’s marketing calendar and whether they were planning any large campaigns in future to avoid any conflict with our own demand requirements. Similarly, I’d like to know any maintenance or routine factory shutdowns.
Wonka Industries have a reputation for creating unique products that aren’t on the market elsewhere, such as scrumdiddlyumptious bars, exploding candy and the everlasting gobstopper. A look over their historic products will show their consistency in this regard.
But as with the other quality concerns, it appears miraculous that the factory can output a large quantity of products at a consistent recipe.
Wonka Industries’ haven’t illustrated whether they have a CSR policy. It could be that they are supporting developing Oompa Loompa communities, or all profit could be being retained by William Wonka.
The company is keen to develop new products, so it might welcome innovation in using Fairtrade cocoa and sustainable packaging. Their loyal following could be incentivised to the circular economy by returning used packaging to local distributors.
The company’s Golden Geese are kept inside, with no obvious access to an outside grazing space. This could cause issues for customers with strong environmental ethics. 52% of the UK’s eggs are free range which suggested demand for intensively farmed goose eggs could be low.
In fact, the company seems quite inward facing, with little regard for market analysis such as consumer trends.
This reflects in the culture of the company, which would make it difficult to engage them in a development process.
A good cultural fit is a key aspect of supplier appraisal because it determines how well you and the supplier will work together in the long run. With Wonka Industries, I think the relationship would have to be treated delicately and it’s likely that he isn’t open to the ideas of others, rather that he prefers to be the leader.
Similarly, he is prone to mood swings and acting on impulse, for example he closed his factory for 3 years because of industrial espionage. This decision was undertaken overnight and without communication to customers!
The governance and ownership of the company affects the communication style, too. If we only buy an existing product, it’s likely that a transactional relationship would run smoothly, although the owner may not respond positively to regimented SLA and KPI reporting.
Automated communication direct to our ERP system is unlikely to be possible.
As previously mentioned, Wonka Industries’ operations are very manual compared to market leaders. It would be difficult for them to implement any Industry 4.0 technologies, such as barcoded movements through the factory which automatically update us on our orders. Similarly, maintenance procedures are likely to be extended as condition monitoring potential is limited.
It’s possible that we could use RFID tags on inbound and outboard goods for real time tracking. Aside from this, communication is likely to be manual. Oompa Loompa messaging can be overcomplicated and confusing, as rhyming must be used and they communicate in groups.
Conclusion | Supplier Evaluation of Wonka Industries
Hopefully Wonka Industries has given you a good example of supplier appraisal and what to look for when choosing suppliers!
Personally, I’d request a copy of Wonka Industries’ Modern Slavery Statement, as the population of the workforce is in a high-risk demographic for forced labour.
Assuming we resolve the ethical concerns, I believe Wonka Industries would be suitable for low-value, transactional purchases.
The governance structure and the company’s unpredictability make them unsuitable for a long-term, strategic partnership. The company is too dependent on the owner, and the risk of him choosing to close the factory, or pass ownership to an underprepared candidate is too great.
Similarly, whilst the company creates innovative new products, it appears to be quite closed-minded when it comes to its production processes and is unlikely to favour technological partnership.