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:
- The 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.
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