Supply Chain Solutions No.21 – Start Small, Trial all New Suppliers
When starting business with a new supplier think of them as a new employee, they can have a vast amount of experience in the given product category but they will be unfamiliar with your businesses process and methodology, they will need to need to go through an induction trial period so both buy and seller develop a solid business understanding.
Start business as an induction, they need to be trained in what is expected from terms or trade, sampling development process, purchase order confirmation, production critical path updates, quality control and logistics. Setup across functional training process as follows;
- Sourcing – Terms and Conditions, Business Overview, Pricing and Capacity Build-up
- Compliance – Social Accountability
- Merchandising – Development & Production Critical Path Time Line, Objectives and Deliverables.
- Quality – Quality Assurance Assessment, Quality Control Process and Corrective Action Improvement Strategy
- Logistics – 3PL process and cost structure
Cross functional responsibility in initiating a new supplier gets buy in from all key departments.
Orders must start small, build-up gradually. Allow more time for the first order as a contingency for unforeseen challenges. After the first trial order place, another few orders, once they have been successfully deliver and all parties are satisfied build up further.
At the beginning of a vendor relationship unforeseen challenges can be just as much the buyer problem as the seller due to communication, allow time for both parties to understand each other and the necessary process. When you are learning a new process, you are slower and more careful, only when you become practiced do you become fast.
Suppliers give advantageous pricing based on future business volumes gaining benefits through quantity and efficiency. Be clear with the vendor from the beginning on the business build-up process so they are aware the buyer has a slow trial start period through the first six months so expectations are well-defined.
In finding a new vendor that meets immediate needs from a pricing and capability perspective and there is a need to ramp up production immediately, or likewise the vendor may have excess capacity and need immediate purchase orders. The introduction procedure must be maintained thinking long term relationship rather than short term gain. In the event ramp up needs to be expedited due to extenuating circumstances, additional resources must be allocated to manage the process and fast track the introduction.
Rushing into production often results in difficulties after 6 to 12 months of business, maintaining a trial build-up period will have a higher success rate of developing a long-term relationship.
ID Global Concepts are experts in supply chain management. We add value to your supply chain through consultancy or management contract to ensure the business has the best practice systems that are the right fit for your business, customer and meet your value expectations.