3 MIN. READ
Leaving suppliers whom you may have worked with for years is not a trivial decision. In fact, the decision may have been made for you thanks to the effects of COVID-19.
Sometimes, breaking ties with them might be the best thing for your business.
Many overseas suppliers were simply unable to produce within a reasonable timeframe. Others were forced to close as part of a lockdown imposed by their nation’s government.
The ripple effect on domestic businesses was severe enough to convince many that it was time to look closer to home.
For decades, the most stated advantage of overseas suppliers was lower cost. In recent years, that price difference had become less of a factor.
More importantly, COVID-19 demonstrated that having a supply chain so far removed from your operation opens a pandora’s box of potential disadvantages.
This brings us back to the need to find and validate new suppliers. Resources such as IndustryNet make it easy to find local suppliers using any number of search criteria. Once a company has been selected, the challenge is to ensure that they are performing to the standards required by your operation. This can be accomplished through several methods.
Professional Relationships
One thing to avoid is falling into an aggressive or argumentative relationship with your supplier. You are both working toward a common goal. If performance milestones are not being met, they can be discussed in a constructive manner.
A positive relationship encourages both parties to grow together, rather than tolerate each other.
Key Performance Indicators (KPIs)
KPIs are specifically selected data points that allow you to measure a supplier's performance objectively. They put you and your supplier on the same page so that expectations are clearly defined in advance.
You can back up any deviations with data rather than personal feelings or suspicions. You can track KPIs with software, ranging from simple database-driven programs to AI-powered supplier management suites.
Important KPIs for vendor performance focus on quality and service, in addition to just price. While often a focus metric in supplier relationships, price is only useful in reference to other factors.
For instance, a supplier may offer a price of $X, but orders are often late and 10% on average are of low or unacceptable quality. In this case, paying a different vendor 1.5 times or more may end up costing less in the long run.
However, paying a supplier 1.3 times more for a product that is exactly the same quality as a supplier who charges 0.9 times more than the original price should be seen as an opportunity to negotiate for a better rate.
Tiers and Levels
Most businesses require the services of more than just one supplier. The importance of these suppliers depends on what function they serve and how critical it is to the final product.
For example, a fastener purchased with a 6-month inventory buffer may not be as critical as a fabrication process that is tied to the production schedule in real time. In this case, a week-long delay with the fastener supplier would not be as critical as a two-day delay with the fabrication supplier.
Treating these two suppliers with different classification levels allows you to focus on the issues that would cause an immediate effect rather than having a one-size-fits all standard.
As you start to look for new suppliers, let IndustryNet help you find the right ones. With 400,000 companies in our free database, we provide the tools to source materials, products and services from every sector of the manufacturing industry.
Get multiple simultaneous quotes, contact key personnel directly and build a list of potential suppliers all in one site. Visit our website today and create new supplier relationships.
