May
26
Supplier relationship management requires a look in the mirror
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When it comes to building relationships with your suppliers, sharing requirements and discussing performance is a direct way of underlining your expectations. For many organizations this is often carried out within the boundaries of a supplier workshop or development review. From the viewpoint of the buyer or commodity manager it can be all too tempting to look at the failures and attempt place the blame for performance and failing to meet expectations solely at the feet of the supplier.
However, in reality, most organizations would benefit from and should employ two way dialogue engaging the suppliers to articulate their perspective on what could be done to improve the situation and the important killer question – “what do we as a customer do wrong”.
What to focus on?
When discussing performance and development issues, the areas to focus may vary from company to company but the typical issues that many businesses face involve QCD (Quality, Cost and Delivery) – But if you now look at it from the suppliers perspective – how can you as a customer influence these aspects?
Lets consider the following:
Quality
• Incorrect Drawings
• Poor Engineering/Technical Support from customer
• Unclear specifications or definitions
• Poor customer feedback
Cost
• Buying policies – will only comit to small batches but buys regularly
• Not open to designing out cost
• Inflexible on packing/shipping requirements
• Wont undertake a joint savings initative
• Sees cost down as just an attack on profit
Lead-time
• Inaccurate leadtime data in customer system
• Ineffective buying policies
• Lack of customer innovation (no kanban, VMI etc)
• Wont relax specifications
• Poor PO commitment
Added to these issues is the equally important issue of the relationship that you have with the supplier – What are you like to do business with? For example:
• Are there effective lines of communication?
• Are you open to change and innovation?
• Are you performance driven?
• Is there an effective commercial arrangement?
• Is there open and honest dialogue?
• Are you clear in what you want and how you want it?
Summary
We all want to have an effective supplier base but this does take considerable effort both in terms of the initial sourcing and the management/development of the supplier. The start point is obviously dialogue and a critique of the current situation but if you only look at the supplier in this critique you’ll be missing probably half (if not more) of the problem and to develop a truly effective (and mutually beneficial) relationship any critique should also involve the customer.