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?