Performance means taking inputs (such as employee work, marketplace requirements, operating funds, raw materials and supplies) and effectively and efficiently converting them to outputs deemed valuable by customers. Since it’s in every company’s best interest to select and work with suppliers in ways that will provide for high quality, it should be understandable that supplier performance is about more than just a low purchase price. In that respect, the costs of transactions, communication, problem resolution and switching suppliers all impact overall cost. Similarly, the reliability of supplier delivery, as well as the supplier’s internal policies such as inventory levels, all impact supply-chain performance.
It used to be common to line up multiple suppliers for the same raw material over concern about running out of stock or a desire to play suppliers against one another for price reductions. But this has given way, in some industries, to working more closely with a smaller number of suppliers in longer-term, partnership-oriented arrangements. Such arrangements, which may typically include a “spreading of risk”, can mean less variation in vital process inputs; and, if your suppliers have proven to be effective at controlling their output, reduced supplier/product auditing.
Since much of what manufacturers purchase is then incorporated into their products, there is a higher inherent risk, or potential impact, in the manufacturing customer-supplier relationship. For this reason, manufacturers often develop detailed supplier-management processes, of which regularly scheduled quality assurance audits (i.e., toward established/agreed release specifications, or GMP regulatory standards) are an integral part. Recognizing that establishing an effective supplier management process requires support from the top management of both companies involved, Walker Downey & Associates, Inc. “supplier audit teams” are committed to helping to build the required mutual trust. Our clients all agree that “spending the time now to develop the relationship helps to prevent problems later.” Contact Walker Downey & Associates, Inc. to learn how we can effectively manage your supplier relationships. The process may not result in a physical product, but that doesn’t make it any less important to the customer.