A contract or framework agreement supplier service specification is a requirement that 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 an organisation’s 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 agreement 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:
- The heavy industrial equipment was CE-compliant when imported but 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 it requires 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.
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