Ever have a supplier miss a deadline? Was it a big one? What did it cost you?
Supplier failures are an all-too-common fact of business, and as easy as it may be to villainize suppliers for failures, sometimes it is simply out of their control. Shipments stuck in customs, logistics hang-ups, and mis-entered purchase orders are just a few of the ways that suppliers can inadvertently throw a wrench in a production schedule. So the million-dollar-question is…what are you doing about it?
Critical Infrastructure can be defined as the collected networks, assets and systems necessary for the fundamental operations of an organization. If asked to list ‘critical infrastructure’, regardless of their sector, most companies would end up with a very similar top ten list.
Somewhere high on that list will likely be facilities, capital equipment and staff. These are all common elements that are necessary for daily operation. In every successful business, each of these components are represented with cautious planning and mitigation to support them against failure. Facilities and equipment receive preventative maintenance; and staff are provided with health benefits, flu-shots, and wellness programs.
Businesses take the time to protect their people and facilities because without them they are dead in the water. Managing suppliers is no different, they are as critical to an operation as the facility’s roof. The question then becomes how to best support vendors and the supply chain. Volumes could be written on how to best mentor small suppliers and strengthen relationships with larger suppliers.
Here are a few simple steps that are easy to implement and will help support your key vendors.
Know your suppliers
Learn your supply chain and maintain an up-to-date documented supplier list for every component used in your products. Once a list is established, track suppliers with performance metrics such as on time delivery and quality. Most importantly, provide the feedback to your suppliers. If a supplier doesn’t know when they fail, they can’t fix it. Metrics and reporting are a one-time headache to implement that will pay off in dividends down the road. Understanding supplier performance metrics provides the opportunity to leverage purchase-volume, delivery and quality as negotiating power. Most importantly, tracking suppliers for quality and on time delivery provides perspective on the value of your purchases and helps to quickly identify when it’s time to shop around for a better deal.
With metrics and tracking in place, the next step is finding the right people in a supplier’s organization to get the feedback to. Suppliers often have Quality Managers as well as Account Reps who can advocate for customer interests. Take the time to invite key suppliers to tour your operation and to visit theirs. Developing relationships with suppliers draws back the curtain separating customer and vendor. In-person visits create discoverable moments and opportunities to learn about emerging products and services that could result in savings through consolidated purchasing. At the end of the day, when something goes wrong it’s easier to fix when there is an existing relationship. In a world of expanding international business suppliers, relationships can be tough to build but absolutely worth the effort. Begin by prioritizing suppliers with poor metrics, as well as sole-source providers. These are the most critical relationships.
Two is one, one is none
Redundancy is a cost risk that can become operationally challenging very fast. So is a last-minute supplier failure. Mitigating these risks means finding a balance. When delivery is critical, when success is the only option, there must be a contingency plan in place. If deadlines are tight, or a part is technically challenging, make sure there is a back-up plan in place to ensure success. Knowing several resources for a complex part or unique material may be necessary. Similarly, doubling ordering lead times may be appropriate to ensure time to reorder should Murphy’s Law make an appearance. Consider the worst-case scenarios and mitigate against them with deliberate, well-planned redundancy through smart supplier management.
Whether its staff, facilities or supply chains, protecting critical infrastructure can be as challenging as it is necessary. When working with suppliers, take the time to understand their capabilities, weaknesses, build strong professional relationships and help them grow. An investment of time with suppliers will show dividends in improved quality and on time delivery metrics in tangible ways to help protect against or minimize the impact of supplier failures. Supplier management is as important as annual roof inspections or employee health and morale. Help your suppliers and they will help you.
Contact KTC today to schedule a tour of our facility and build a relationship with us.