Competition
The
Manufacturing environment for the horizontally integrated organization is
extremely competitive, which makes the need to focus on supplier performance an
important venture. When keeping your costs
low for your customer, you need to be certain that you are not sacrificing your
reputation or your livelihood.
Quality
typically varies with cost. If a supplier bids low, are they doing it to gain
your business or is the quality of their offering inferior to others? Remember the
Good, Fast, and Cheap model. There are
instances where inferior grades of metal or hardware were supplied which later
got vendors in trouble and wreaked havoc on the horizontally integrated company.
An organization who has to recall their
product in order to rework it to specifications may end up taking a huge loss. On
government contracts the repercussions can be immense (McDermott, 2010, FAA 2017).
Lawsuits are expensive and the only entity profiting are the law firms.
Both
organizations involved typically incur losses, and even the organization who is
awarded compensation has no guarantee that the supplier has the funds to pay. Inferior
products can even result in the loss of lives, driving liability through the roof
(FAA, 2017)!
It
becomes important, and many standards require, that traceability (from cradle to
grave) is documented on everything that goes into a product. All materials, processes,
and hardware should be traceable by the vendor who is supplying the product. Competition
should be rated on quality first. Only then should cost or delivery become a determining
factor.
McDermott,
D. J. (2010) Inferior Metal Used on Navy Subs, The Day, Available online at: http://www.theday.com/article/20101020/NWS09/310209893
