Market
Supplier Relationships and Supplier Performance
Horizontally
integrated organizations have an extended network of supplier relationships.
The supplier is important because suppliers control the quality of the product
or service that they give to you. Just as a chain is as strong as its weakest
link, your product is as good as the lowest quality part or process that is put
into it. This makes supplier selection important to you and your reputation.
Appropriate
supplier selection is more than considering price. Do your suppliers take pride
in their work; and does the quality of work they perform meet or exceed your expectations?
How easy is the supplier to work with? Will they team up with you if they know
that you are against a deadline? If, for whatever reason, they give you bad
parts, do they resolve the incongruity quickly? How far are they from you? Are
they unique in the market, or are there similar suppliers that can be used as
backup?
If
you want your product or service to be remembered in a positive light, you need
to pay attention to what it consists of. Within your organization, you have processes
and functions that you control to improve performance. If you are a
horizontally integrated organization, you are at the mercy of your suppliers to
synchronize with your business plan to do the same. This is accomplished with proper communication; feedback and action plans. The response to “Can supplier performance be tracked
and improved?” is a resounding yes. And if you do it correctly, your suppliers might even like it.
Many
standards require Supplier Performance Measurement (SPM) in order to get –and
maintain certification. Is a supplier maintenance program providing a benefit
for your organization; or is it merely a cumbersome exercise that satisfies an
auditor who dissects your company for the sole purpose of displaying a certificate
that says you meet a particular standard? Some standards try to be self
sufficient by implying that your organization should do business with suppliers
that also meet the standard. In fact, maybe
your organization is a supplier to a downstream customer who requires that you
adhere to a certain standard in order to keep their business.
In
a competitive environment, supplier control and measurement become critical
activities. A supplier rating system can provide the composition of
communication, measurement, and feedback. It gives an organization more control
over their product, and if performed correctly, it builds teams between the
organizations of the customer and supplier.
