Feb
15
10 tips for Mitigating Problems with Suppliers
Filed Under Blog | Comments Off on 10 tips for Mitigating Problems with Suppliers
Depending on a robust supply chain is essential for any enterprise and problem suppliers are a very big determining factor for success or failure. All too often disasters are experienced due to poor performance (product below standard), delayed or failed deliveries, and even financial issues such as bankruptcy. Problems such as these can cause the buying organization to lose income and in some cases causes you’re the business to grind to a halt. It is therefore important to implement risk management and preventive measures as part of your supply chain optimization.
Supplier optimization includes tools and process that ensures the best possible operation of manufacturing and distribution within your supply chain. The process and tools identify potential problem sources within the supply chain and creates a window of opportunity where the customer and their supplier through collaboration can place mitigating practices to address key issues and concerns.
Ways of mitigating the problem can be formulated by both parties, by considering the most common causes of issues. For example:
Production Capacity
Miscalculating the supply chain capacity produces disastrous consequences, particularly for those suppliers that little experience of your product. The best way to handle this is to be fully aware of your suppliers capacity and to start small on new suppliers, gradually building on available capacity as they gain experience.
Miscommunication between customer and supplier
Failure to speak at the same level or language with your supplier is an open invitation to potential problems. For example when carrying out a forecasting exercise, use the language that your supplier understands like how many customers are using the supply chain and how many SKU’s/Shipsets are expected within the period rather that asking for their estimated increases in production. Develop processes that ensure communication is well understood and acted upon.
Your tools and systems
Tools and systems for planning should be flexible enough to include current and future requirements. Your existing tools are maybe good enough for current needs but you must consider how you will interface with your supply chain – sharing information about future orderbook (especially where the product is complex or susceptible to lengthy leadtimes) can be a key success factor.
Shared planning between supplier and buyer
Where there is a heavy reliance on an external supply chain – involving these ‘partners’ in your planning is vital – planning should be a shared activity.
Production risks and issues
Determine any risks or issues in your suppliers production processes – is there reliance on hard to get material – or reliance on key machinery – what will happen if there are issues? Does your supplier have a mitigation strategy?
Planning for reductions in requirement
Once again sharing information with your supplier about your orderbook can not only help the supplier when capacity requirements increase but also where there is a reduction in demand. Variation in demand can have wide reaching implications – forward planning can ensure that your supplier mitigates any financial issues and remains available.
Personnel turnover
Particularly for key personnel in the supply chain, measures should be in place to cover issues such as departures or lengthy absences – this is especially true where manufacturing knowledge may be held within a small team of people – your supplier may have the material and equipment but without the knowledge to manufacture the product they are in trouble!
Continuous improvement
The supply chains adherence to constant improvement is a good mitigating measure. Supply chains that have continuous improvement systems such as kaizen will more likely be able to handle production problems. How are your suppliers geared up for this?
Formal capacity planning program
Continuous improvement on the effectiveness of the capacity-planning process is a requirement in setting goal for expansion and improvement of at least one part creating new versions of the plan. These help mitigate supply problems on flexibility, ensure capacity is assessed regularly.
Learning from lessons when things go wrong
One of the most powerful tools for mitigating problems with suppliers when things go wrong is to learn from mistakes. However harsh, mistakes will happen – what sets apart a goods supplier from a poor one are those that learn from their mistakes – fix the problem and improve. Repeated issues or a failure to stop systematic issues are a sign that all is not well.
Feb
2
What are the key questions you should ask a new supplier
Filed Under Blog | Comments Off on What are the key questions you should ask a new supplier
Establishing an effective supplier network can be complicated – signing up to new suppliers is a gamble – you are relying on continuity within your material flow with minimal risk. Most organisations will adopt rigorous sourcing processes to help in select suppliers that adequately meet business needs – but what are the key questions you should ask of a new supplier? Consider the following:
Can the supplier demonstrate the required performance levels you require?
Of primary importance is whether the supplier can provide the flow of parts to the schedule that you need and meet your quality requirements – this is usually the primary reason that you wish to do business so you must be comfortable that the supplier can deliver accordingly.
Is the supplier customer-responsive?
Within the supply-chain, communication is key. Responsiveness to the customer can be indicative of both attitude and performance. Bear in mind that most organizations require more than just material flow from their supply chain adequate communication between both parties can be vital.
Do they have the experience and expertise?
A supplier’s experience is a valuable way to gauge its expertise. Although newer firms may offer quality products, more experienced companies generally have more established workflows and thus, can offer a more reliable supply. Be comfortable with the pedigree of the organization – this could encompass processes, people and systems. It may be beneficial for you that the supplier provides sample materials/products which can be scrutinized (this could include a qualitive review of the production process).
Can they easily integrate into your business processes?
It would be helpful if you agree on certain terms and work descriptions so that you ensure any ambiguity regarding the product is removed. It would also benefit the supplier to consider how the two organizations processes will be integrated as part of the procurement transaction (this is especially true when dealing with complex parts).
Do they have dedicated account management and references?
A good company will always have a good number of clients. These clients should be made known to you so that you can research performance. It is also an unbiased way for you to find the weakness of your supplier. It is also important for you to ascertain key contacts – typically your account manager. Any relationship between supplier and buyer will have its foundations with the account manager – they will assist with any disputes or development activity.
What is the basis of the supplier/buyer relationship?
You should be able to negotiate a guaranteed price for a certain amount of time. You should also be able to renegotiate terms every so often to reflect changes in the market. In addition, all terms should be set out on a contract or agreement – in order that all parties are aware of their responsibilities and facilitate resolution in the event of any dispute.
What happens when change occurs?
Sometimes, a project may be canceled, meaning that forward demand is no longer required. How would you deal with that situation? What contingency will you put in place? Conversely if the supplier has changes in their business, for example a change of ownership or financial issues – what will it mean to you?