Identifying suppliers that consistently meet our Quality, Cost and Delivery expectations can be a real challenge. Is there a simple formula for supplier Image may be NSFW.
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selection, or is it okay to rely on our intuition and gut feel?
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Here are my top 5 tips for supplier selection, but what do you think is important to consider when selecting a new supplier?
1. Assess potential risks when selecting strategically important suppliers.
– Could their geographic location pose a potential risk or impact lead times?
– Do they have the ability to meet both our current and future capacity demands?
– How reliable is their logistics / delivery capability?
– What do we think of their financial stability in the long term
– What is the alternative supply option should they fail to meet commitments?
2. Commercial considerations go beyond the lowest price.
– Is their price competitive?
– Are they co-operative, flexible and keen to work with us?
– Do they have polices and procedures covering CSR, Quality, Safety, Environmental
3. Understand their resources and capabilities
– What are their Management capabilities and do they have a succession plan?
– What are their Design, technological and Machinery / Equipment capabilities?
– What is their annual investment in R&D and Training?
4. Supplier performance
Quality, Cost and Delivery are recognised as Key Performance Indicators – but can the supplier demonstrate past performance with thier existing customers?
5. Continuous Improvement
As well as driving day to day performance, effective supplier development strategies include a programme of continuous improvement where the rate or degree of improvement can be measured, for example:
– Order cycle time reduction from order placement to receipt of goods
– Reduction in parts per million defects
– Improved on time delivery
– Price reduction
– Reduction in new product development time from concept to volume production
Click here to Benchmark your supplier performance (Sample Report)
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