By Dr. Tom DePaoli
Most purchasing professionals are familiar with the usual quantifiable supplier metrics and measures. Sophisticated computerized tracking programs exist to measure these traditional performance factors. There are nontraditional supplier metrics/activities that can help not only to rate a supplier, but also to build much stronger supplier relationships.
First, you can learn a lot about a supplier by visiting its sites and just observing the cleanliness of the plant, morale of the employees and overall sense of urgency of the operation. For most purchasing professionals the challenge is finding the time to conduct these visits and conducting them skillfully. A planned and disciplined site visit schedule can help overcome this obstacle. Every site visit should be documented and have a report filed for future comparison. It should always include the subjective impressions of the visiting purchasing professional.
How a supplier performs in disaster recovery (yours) provides an invaluable lesson of their commitment to you. We once had an electrical supplier lead the effort to restore power to one of our chemical plants after a devastating hurricane. The employees at the plant still marvel about how well they performed. These out-of-the-ordinary efforts should result in strong recognition to the supplier and possible increased sourcing from them. It can lead to another strong relationship-building activity of pre-planning for possible disaster-recovery with not one but multiple suppliers before they happen. Often vulnerabilities can be anticipated and dealt with appropriately.
Participation in process improvement efforts, such as Lean Six Sigma, is another strong builder of supplier commitment. Supplier input and suggestions to specifications changes for a part or service are invaluable. Many suppliers are eager to provide suggestions to help improve your process. Turnabout is fair play and you should participate in their process improvement and process-mapping efforts with their products, especially those that you purchase.
We once had a supplier increase the life of a critical part that cost us $35,000, from 30 days to 250 days. It did take two years of painstaking work and experimentation. Eventually, because we dramatically reduced the dollar value of our purchases (with the supplier’s help), we hired the supplier as an ongoing technical service consultant. They had learned so much about our production process and now had the capability of providing invaluable insights.
Sharing of R&D efforts and data systems is another high level of cooperation that can lead to mutual benefits. Obviously this requires an extremely high level of trust and collaboration. It quickly reveals the IT capabilities of the supplier and its ability to respond to your needs. Many suppliers are often willing to share industry and market research with customers along with forecasting techniques. Take advantage of their expertise in these areas.
These types of relationship building metrics/activities can lead to dramatic gains for both the supplier and the purchasing professional. A purchasing professional needs to realize that most are not quick fixes but require a concerted and tough long term effort. The payback can be dramatic.