10 Tactics for Managing Suppliers

Artist: Josephine Chervinska http://photo.net/photos/josephine
Artist: Josephine Chervinska http://photo.net/photos/josephine

In the last weeks I allocated much time finalizing the contract with our major internal supplier.  I used this found post as a a checklist for the contract and adapted it for a contact center environment.

Start by treating your suppliers as true partners, not just vendors.

Successful supplier relationships require two-way information, recommendations, metrics and incentives.

I adopted the following tactics to manage our major supplier throughout the contract’s life:

    • Understanding the cost and value of the entire supply chain.
      Without a thorough understanding of all costs, from service,  C-SAT, First Line Completion and First Time Right the value provided by the supplier in the process, a supplier, our operations and the customer experience cannot be evaluated.
      • Realize that supplier tactics go two ways.
        Most companies focus on what suppliers can do for them rather than on what they can do with the supplier to lower costs. A true partnership leverages the total production cost to both parties’ advantage.
        • Accept accountability.
          Companies should plan sufficiently in order to request orders from suppliers with acceptable lead time and without multiple changes. If every order requires emergency handling, the relationship will never work. In our case we work with a rolling 15 monts-forecast!
          • Incorporate appropriate service levels and metrics into agreements.
            A relationship based on a handshake is far more likely to encounter problems than one in which expectations are clearly established and agreed upon.
            • Spend equal time aligning incentives and penalties.
              The extra value created when production and asset utilization is optimized within the entire chain should be the basis of improving the value proposition for both parties.
              • Share critical information as early as possible.
                Information is the grease that makes an integrated supply chain work. Waiting to share critical volume and timing information with suppliers can create lost business for the company or excess overcapacity for the supplier. Sharing information constantly, with appropriate security and confidentiality, is critical for successfully managing a supplier relationship.
              • Plan for everyday exceptions.
                Sometimes emergencies will occur, especially in complex, multilabelled supply chains as of our company.  We analyze why they occur so that the number of emergencies is minimized.
                • Plan for major contingencies.
                  Unavoidable events that stress the supply chain should be planned and practiced. Some industries, such as the utilities I used to work , implement plans for natural disasters. Every supply chain strategy requires similar foresight and joint planning so that disruptive events can be managed smoothly: e.g. the current Mexican flu.
                  • Expect and reward honesty.
                    As in personal relationships, the best supplier relationships require honesty when exceptions to normal operations occur. Companies should require immediate notification without penalty when critical supplier situations occur.
                    • Make relationship meetings meaningful.
                      Companies often hold formal quarterly meetings without appropriate representation in which the vast majority of time is spent on information best provided through other communication forums. Instead, relationship meetings should focus on critical issues, areas for supplier improvement and discussions on how the buying organization can improve the relationship.
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                      Original post found at http://www.industryweek.com/articles/10_strategies_for_managing_suppliers_19580.aspx

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