Supply Chain Solutions No.22 – Shared vision, value driven attitude and adaptable, does that equal the perfect Supplier?
There are different reason why sourcing activities need to take place, be it market research, business growth and capacity expansion, market risk and diversification or replacement of existing underperforming suppliers. Either way, unless it is an entirely new product category that existing vendors are unable to manufacture, the question being, are the existing suppliers or a particular individual supplier in question capable of fulfilling the reason why you are sourcing potential replacements?
Should we sustain this Supplier?
Even if labour or raw material costs increase in the region, if the supplier’s performance delivers continuous value, there is an open relationship of trust, and there is a necessity to retain the business knowledge. Then both parties, buyer and seller, should work together to find new business options domicile to the vendor or in new regions which will strategically benefit both sides. If the supplier does not want to change, then both parties should work out a plan to transfer the business over a period of time that is viable to both sides.
Should we improve this Supplier?
If the supplier does not add margin value but they have the right attitude, offer innovation, product knowledge and are willing to improve and make the necessary change to do so, do you put the time and energy into improving the vendor’s processes by committing the time and resources into the suppliers’s redevelopment. Providing the price offers margin potential and through continuous improvement further sustainable value will be seen from performance in time, quality and cost then most definitely the investment is worthwhile. The result will be a sustainable, lasting relationship.
Should we improve or move from this Supplier?
When a vendor offers a good price but their attitude makes them difficult to work with, and their not willing to change or improve, this is the time when a vendor must be replaced as the relationship is not sustainable. Ultimately problems will occur in delivery performance, or the vendor will act in a way that is not ethically or commercially viable. Do ascertain the reason why the challenge has or is occurring in case there are any ‘personal’ conflicts of interests at a lower level, but if the problem exists within senior management or the owner’s alternative options must be found.
Shared vision, attitude and willing to learn does, this make a great Supplier?
Like a good employee, if the supplier shares the companies vision, has the right attitude and can be educated you can work with them openly and move through most hurdles. If one of the three key attributes are missing, you need to be wary and start making backup plans especially if KPI’s suggest value is diminishing. Where two of the key attributes are missing it will be tough to move this supplier to where they need to be, this vendor will not be a sustainable option and replacement is forthcoming.
Are you getting the most from your supplier relationships? Do your vendors meet your companies vision, do they have a right attitude and are they adaptable resulting in sustainable value?
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.