Having the right suppliers will maximize your competitive advantage.
You set high expectations for your company--and so do your customers. Sourcing strategies and processes for supplier evaluation and selection must be based on the right criteria for your company. Purchasing and procurement processes rooted in the past won't support the strong supply base you need now. Once selected, explains Miriam Boudreaux of Mireaux Management Solutions, suppliers should be reevaluated regularly.
In your initial collection of data about your supply base (or potential suppliers you might add), Boudreaux suggests including such criteria as:
Boudreaux emphasizes that good sourcing practices require the discipline to maintain good records of actions and results. For ongoing measurement, she suggests you consider including such basic metrics as on-time delivery, return rates and any corrective actions that have been required. By monitoring performance data, problems will be visible immediately. There?s no point to collecting data, however, without additional processes for analyzing and acting on it.
Your sourcing policy should call for systematically reevaluating your suppliers periodically. Boudreaux suggests that you simplify the process by classifying suppliers into three tiers of criticality. You may decide to reevaluate critical, Tier 1 companies monthly based on supplier corrective actions, returns, on-time delivery and customer complaints. Tier 2 suppliers might be reevaluated annually based on supplier corrective actions, and Tier 3 supplier reevaluation could be scheduled for every two years and focused on returns.
Over time, some companies will perform better than others. Ongoing analysis of performance data and regular reevaluation will tell you when to consider dropping a supplier. Likewise, it will show you who your excellent performers are.
Customer-supplier relationships are becoming more collaborative, aiming to make both companies more competitive and profitable, says Boudreaux. You need to start by finding the best suppliers based on value-oriented criteria. Then, as you keep track of the quality of incoming parts and materials, the data you collect provides a basis for setting continuous improvement goals with your suppliers. Working together, you will build the best final product for the end customer.
Miriam Boudreaux is president of Mireaux Management Solutions, which helps clients implement quality management systems based on the ISO standards (ISO 9001, ISO 14001, etc.) or the American Petroleum Institute (API) specifications. She also publishes the ISO Vanguard blog at http://www.mireauxms.com/MiriamsBlog.aspx.
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