1️⃣ Strategic Alignment

• ☐ Does the supplier align with our long-term business strategy?

• ☐ Can they scale with our projected growth?

• ☐ Do they support our geographic expansion plans?

• ☐ Are they aligned with our ESG / sustainability goals?

• ☐ Do they support innovation and continuous improvement?

2️⃣ Financial Health & Stability

• ☐ Reviewed 3 years of audited financial statements

• ☐ Assessed credit rating / D&B report

• ☐ Evaluated debt levels and cash flow

• ☐ Assessed exposure to economic or geopolitical risk

• ☐ Verified insurance coverage (liability, product, cyber)

⚠️ Red Flag: Heavy reliance on one or two customers.

3️⃣ Operational Capability

• ☐ Confirmed production capacity meets demand

• ☐ Evaluated lead times and flexibility

• ☐ Assessed capacity buffer during demand spikes

• ☐ Reviewed equipment age and technology

• ☐ Verified backup facilities / redundancy

Pro Tip: Conduct an on-site audit whenever possible.

4️⃣ Quality Management

• ☐ ISO certifications verified (e.g., International Organization for Standardization standards)

• ☐ Historical defect rates reviewed

• ☐ CAPA (Corrective and Preventive Action) process evaluated

• ☐ Traceability systems verified

• ☐ Quality KPIs benchmarked against industry standards

5️⃣ Risk Assessment

• ☐ Supply continuity risk analyzed

• ☐ Single-source dependency evaluated

• ☐ Geographic concentration risk reviewed

• ☐ Cybersecurity controls assessed

• ☐ Disaster recovery and business continuity plans reviewed

Consider using structured risk frameworks like ISO 31000 for risk management alignment.

6️⃣ Cost & Total Cost of Ownership (TCO)

• ☐ Unit pricing benchmarked

• ☐ Logistics costs calculated

• ☐ Tariffs and duties included

• ☐ Inventory carrying costs considered

• ☐ Quality failure cost modeled

• ☐ Long-term price stability evaluated

Remember: Lowest price ≠ lowest total cost.

7️⃣ Compliance & Regulatory

• ☐ Industry regulations verified (FDA, EPA, etc. if applicable)

• ☐ Trade compliance validated (ITAR, export controls)

• ☐ Labor practices audited

• ☐ Environmental compliance reviewed

• ☐ Data protection compliance confirmed

8️⃣ Technology & Data Integration

• ☐ ERP system compatibility confirmed

• ☐ EDI/API integration capability verified

• ☐ Real-time visibility tools available

• ☐ Forecast collaboration capability assessed

• ☐ Digital maturity benchmarked

9️⃣ Performance Metrics & SLAs

• ☐ Defined KPIs (OTIF, lead time, fill rate, quality ppm)

• ☐ Service Level Agreements established

• ☐ Penalty/incentive clauses defined

• ☐ Continuous improvement cadence established

• ☐ Quarterly business review structure defined

🔟 Cultural Fit & Partnership Potential

• ☐ Leadership accessibility evaluated

• ☐ Communication responsiveness tested

• ☐ Problem-solving culture assessed

• ☐ Transparency and trust demonstrated

• ☐ Willingness to co-invest in innovation confirmed

🔎 Final Decision Gate Review

Before contract signature:

• ☐ Multi-functional approval (Procurement, Finance, Ops, Legal)

• ☐ Risk scoring completed

• ☐ Pilot order or trial run executed

• ☐ Executive sign-off obtained

• ☐ Contract reviewed for exit clauses and flexibility