In most organizations there is a heavily reliance on bought in goods and materials \u2013 typically these are transformed through various processes into the finished product for the customer. Poor performing suppliers can have a significant impact. But how should you manage suppliers that don\u2019t perform as expected.<\/p>\n
What constitutes a poorly performing supplier?<\/p>\n
The expectation that the buyer has with the supplier is that<\/p>\n
a)\tCommunication is straight forward and effective
\nb)\tCommitments in terms of delivery promises and product quality are met
\nc)\tProblems and issues are dealt with swiftly<\/p>\n
Poor performing suppliers can wreak havoc in a business from halting assembly lines through to impacting customer satisfaction with common challenges such as poor delivery schedule adherence, poor quality. <\/p>\n
Putting things right<\/p>\n
The first step is to understand what the problem is – don\u2019t be subjective and with robust analysis of the data determine the extent of the problem<\/p>\n
For example where the supplier is deemed to be delivering late \u2013 it\u2019s important that this can be proved beyond reasonable doubt \u2013 how many shipments were due in \u2013 how many arrived \u2013 what percentage failed and what was the impact of the failure on the buying business?<\/p>\n
Route cause Analysis<\/p>\n
The central theme of any improvement activity must be to understand the cause of the problem. In the case of a poorly performing supplier don\u2019t be surprised if some of the blame doesn\u2019t rest with the buying organization.<\/p>\n
For example with regard to poor delivery performance <\/p>\n
\u2022\tare you buying within leadtime (i.e. leadtime is 6 weeks and you want it in 2)
\n\u2022\tWhat is the demand signal from the buyer to the selling company
\n\u2022\tIs there any ambiguity over the due date for the products
\n\u2022\tHas there been any waiting time for the product to be booked into the system<\/p>\n
Its not surprising that DSA (Delivery Shcedule Adherance) is often a cause for much debate between companies, you\u2019ll often find that when the two bring their statistics to be compared that they\u2019ll give different results.<\/p>\n
Whatever the problem find out what\u2019s driving it \u2013 and then understand what fixes need to be put in place to prevent a repeat occurance<\/p>\n
Develop, Sustain or Exit?<\/p>\n
With any supplier there is a choice not to use them anymore. Performance should be one of the contributory inputs into the supplier management program which will typically have three routes for suppliers<\/p>\n
\u2022\tDevelop \u2013 develop the relationship between the business and possibly increase levels of orders
\n\u2022\tSustain \u2013 sustain current business level but do not award new products
\n\u2022\tExit \u2013 Exit the supplier and do not use<\/p>\n
Clearly for poor performing suppliers where there is competition in the marketplace \u2013 exiting a supplier is a very powerful tool<\/p>\n
During your improvement activity you should be clear with the supplier what the potential outcomes of the activity will be \u2013 this may facilitate the appropriate behaviour from the supplier!<\/p>\n
Regular Supplier appraisal<\/p>\n
The key to supplier performance is regular reviews, and the introduction of action plans where appropriate. However most organizations will have several hundred (if not more) suppliers so formal reviews with each supplier may not be practical so consideration of criticality and spend will usually determine which suppliers will be engaged.<\/p>\n
This list can be reviewed based upon feedback from appropriate performance measures with suppliers being added or removed accordingly.<\/p>\n","protected":false},"excerpt":{"rendered":"
In most organizations there is a heavily reliance on bought in goods and materials \u2013 typically these are transformed through various processes into the finished product for the customer. Poor performing suppliers can have a significant impact. But how should you manage suppliers that don\u2019t perform as expected. What constitutes a poorly performing supplier? The […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_post_was_ever_published":false},"categories":[1],"tags":[75],"class_list":["post-73","post","type-post","status-publish","format-standard","hentry","category-blog","tag-management"],"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t