It goes without saying that every organization wants high-quality suppliers. However, managing supplier quality is much more complex than issuing a PO to a supplier that has it show you its documented processes and agree to your supplier scorecard requirements.
Developing a high-quality and trusted supply partner requires time, effort, and a mutually beneficial relationship that goes beyond the nuts and bolts of a sales agreement. The fact of the matter is that nothing ever goes as planned, and when the plan changes, it’s important to have a supply partner willing to adjust along with you to ensure mutual success.
Additionally, when the infamous supplier scorecard is the sole focus of supplier compliance and improvement, it’ll often work against your efforts. This resistance develops because the supplier is hyper-focused on any decisions that will impact its scorecard performance and will often resist your needs due to a perceived negative scorecard impact. This requires that your supplier quality program must be much more robust than a simple scorecard and a few phone calls.
Below are four tips we recommend to boost supplier quality and help drive your supplier development strategy, setting you and your supply partners up for long-term success.
4 Tips to Boost Your Supplier Quality Management
1. Get to Know Your Supplier’s Team
Early on in the supplier-customer relationship, the best thing you can do is to meet face-to-face. Not only is this prudent for a supplier’s point of view, but also to show commitment to your supplier that you’re interested in building a relationship with them. Furthermore, regularly meeting face-to-face will allow you to get to know your supplier’s stakeholders and make it that much easier to request a potential favor when you need it most.
2. Implement a Communication Plan
Regular, pre-planned, and documented communication is vital to supplier success. This both supports and informs your Get to Know the Team efforts above, and sets communication expectations for the relationship. Because, after all, supplier communication is a two-way street.
Your communication plan must also define the potential communication escalation plan during a supply disruption event. Pre-planning the communication escalation procedure when a disruption occurs may save valuable time and reduce miscommunications.
3. Share Success in Your Supplier Agreement
Getting to know the team and developing a plan to communicate are important practices, but they aren’t sustainable unless there’s shared success throughout the relationship. At the end of the day, cash is king and it’s critical to develop supply agreements that provide an economical incentive to continue to partner and grow together.
Some great ways to accomplish this are sharing savings from captured operational cost reductions defined in the sales agreement, monetary incentives for early delivery, and sharing raw material/components group buying cost savings.
4. Don’t Make KPIs Your Sole Focus
Key Performance Indicators (KPIs) are essential to running a business, but if too much emphasis is placed on ensuring your supplier meets scorecard KPI targets, the supplier may over-focus on hitting these targets and under-focus on serving your actual needs. Furthermore, this overcompensation is worsened by tying heavy economic incentives to said targets.
Simply put, if a supplier must choose between satisfying a KPI requirement for financial reasons or bailing you out in a jam while sacrificing the specified financial incentives, they’ll choose the former. KPI targets and incentives have their place, but they must be planned out thoughtfully while considering all the other aspects of your supplier development strategy.
-Chris
