When customers decide to pare down their supply base, you don’t want your company to be on the chopping block. What does a manufacturing customer want in a supplier?
It’s All in the Details
In the automotive industry, ZF TRW’s purchasing policy shows an example of the exacting requirements its suppliers must satisfy. ZF TRW defines the three most important success factors for its suppliers as quality, productivity and service/delivery.
In the quality arena, for instance, ZF TRW is looking for the number of defects in products from a supplier to be cut in half every year. In addition, ZF TRW expects a supplier to offer price reductions every year because the supplier’s continuous improvement process should reduce costs enough to allow it to cut prices without sacrificing profits. When it comes to connecting the supply chain, ZF TRW wants complete data exchange capabilities. Finally, it expects 100% on-time delivery.
New Green Expectations
In addition to quality, productivity and service/delivery expectations, more and more companies are issuing environmental, energy management and sustainability guidelines for suppliers. Those leading companies want to see continuous reductions in a supplier’s CO2 emissions, packaging waste, water consumption, energy usage and other environmental impacts. Suppliers also should have workforce diversity programs, and safe working conditions are a must.
To build strong supply chains, elite companies set specific, detailed standards for their suppliers. If their suppliers, however, had several of these companies as customers, each with their own certification requirements and auditing processes, they would bear a real burden. That’s where the International Organization for Standardization (ISO) can be a lifesaver. Through ISO, members have set rigorous, international, consensus-based, global standards for quality management (ISO 9001), environmental management (ISO 14001) and energy management (ISO 50001) systems, all designed to fit together. When a company accepts ISO certification in place of its own purchasing requirements, it can simplify life for itself and its suppliers.
Eyes on the Prize
In addition to published standards, other models of supplier guidelines, scorecards and evaluation criteria abound. One is the well-known Baldrige Award’s Excellence Framework for Manufacturing. Even if you don’t intend to apply for the Baldrige Award, the website provides resources for self-assessment that tell you how to become an ideal supplier.
Manufacturers should expect more and more customers to require adherence to their own guidelines and ISO standards. Suppliers shouldn’t wait until that happens. In an ever more demanding marketplace, it’s smart to get on the path now if your company is to remain competitive.
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