Supplier Shortlists
Part of Managing repeat supplier orders
Building a second source for a critical product
Assess an alternative supplier for a critical product by checking product match, order terms, shared dependencies and readiness.
A second source is useful if another supplier can make an approved product version and has a workable path to supplying the quantity and timing you may need. Assess that before a disruption. An alternative contact or indicative quote alone does not establish product approval or availability.
Define the continuity need
Identify the product or variant whose absence would materially disrupt customers or operations. Record the minimum usable quantity, destination, latest useful date and features that cannot change. If a different product could serve the need, assess and approve it as a substitute; do not call it the same item.
Check critical shared dependencies. Two sellers may rely on the same factory, component, tooling or transport route. Ask who performs the production step that matters and whether that arrangement could change. Record what remains unconfirmed; a supplier's account does not prove independent capacity.
Assess the candidate for this product
Give the candidate the current approved specification. Ask it to identify deviations, minimum order, lead-time starting point, production route and any tooling or rights it would need to make the item. Check the seller's identity and investigate material production claims.
Assess a sample or pilot lot against criteria set before review. Keep changed materials, components or finishes as proposed versions until approved.
For consumer products supplied in Australia, identify requirements applying to the candidate's actual version and seek suitable product-specific evidence. A report for the incumbent's goods does not automatically cover another maker's product. The ACCC advises that it is generally not enough to have a pre-production sample of a product safety tested without further quality assurance.
Critical considerations when assessing a second supplier
- Product match
- Must meet approved specification; sample must be assessed before approval
- Supply capacity
- Confirmed through minimum order, lead time and production route details
- Shared dependencies
- Check factory, components, tooling, transport routes – not just supplier claims
- Product safety compliance
- ACCC requires ongoing quality assurance beyond pre-production testing
Check whether an order could be placed
| Question | Evidence to seek |
|---|---|
| Can it make the approved item? | Assessed sample or lot, identified deviations and open checks |
| Can it supply the needed quantity? | Supplier-stated capacity and minimum-order assumptions for the relevant period |
| Can it deliver to the right point? | Goods-ready basis, packing plan and remaining freight tasks |
| Could you order promptly? | Contacts, current quotation basis and approval steps |
| Does it reduce dependence? | Production site and critical shared inputs, to the extent they can be established |
A pilot can reveal product, packing and communication issues within its scope. It cannot prove capacity during a future disruption. Treat a quote or capacity statement as conditional on its date and assumptions. If reserved capacity matters, define its quantity, period, price and conditions in a written arrangement and assess its cost.
Key steps to assess a second source for a critical product
- Can it make the approved item?Assessed sample or lot, identified deviations and open checks
- Can it supply the needed quantity?Supplier-stated capacity and minimum-order assumptions for the relevant period
- Can it deliver to the right point?Goods-ready basis, packing plan and remaining freight tasks
- Could you order promptly?Contacts, current quotation basis and approval steps
- Does it reduce dependence?Production site and critical shared inputs, to the extent they can be established
Record the readiness decision
Use a status tied to evidence. Candidate means a supplier has been identified. Assessed for a stated order means product evidence and terms have been reviewed for that order, with any open conditions named.
Contingency arrangement agreed means additional ordering or availability terms are documented; it still does not guarantee supply in every disruption. Recheck the status if the specification, production site, capacity or terms change.
For this business decision, record who may activate the second source, which evidence must be current and how stock from different approved versions will be identified.
Process to establish a second source for a critical product
- CandidateSupplier has been identified
- Assessed for a stated orderProduct evidence and terms reviewed for that order, with any open conditions named
- Contingency arrangement agreedAdditional ordering or availability terms are documented; does not guarantee supply in every disruption
Second source readiness status: what each level means
- Candidate
- Supplier identified but no assessment completed
- Assessed for a stated order
- Product evidence and terms reviewed; open conditions are documented
- Contingency arrangement agreed
- Terms formally documented, but supply not guaranteed during disruption
