4. Determine Who's Calling the Shots
Once you establish the criteria for evaluating suppliers and vendors, who in your company will be responsible for reviewing the data. It depends on how much resources you have to dedicate to evaluating your suppliers, says Boudreaux. 'You may want to assign one person or a team with this task.' For instance, selecting and evaluating level 1 suppliers and vendors, might require the chief financial officer or someone from the finance department along with the president and representatives from purchasing, operations, and engineering or IT. With level 2 and 3 suppliers and vendors, it may be the purchasing or procurement officer who approves the supplier or vendor list and monitors performance.
'I always made sure that the user group was involved in the process. The individuals who were using the product or service were very active in the process from the very beginning—at the point of selection,' Wright says.
Dig Deeper: Supplier Relations
5. Maintain Good Relationships
Consider your suppliers and vendors as part of the team and treat them as such. Communicate often and openly. Technology is great but don't overlook the personal touch of a phone conversation or face to face meetings, says Greenblatt. Also, avoid supplier and vendor conflicts by paying on time or at least honestly addressing late payment issues and talking with your supplier or vendor about it. Be upfront and transparent with suppliers and vendors. Make sure they understand your needs and expectations.
'To improve our relationship and communication with our vendors, we added a page to all of our print materials (drawings) calling out exactly how we are going to package things,' adds Greenblatt. 'So, if it is going to be two layers of bubble wrap or an extra layer of padding between each part so that there is no scratching. We go through that level of detail so that we are not disappointed when parts come in.'
Dig Deeper: Product Supplier Agreement
6. Decide When to Issue a Red Flag
As you monitor a supplier's performance, you have to decide when to praise them and when to issue a read flag, says Boudreaux. Show appreciation for a job well done; give a supplier additional business because of excellent performance. 'A bad supplier will provide you with mediocre or poor products and services and cause a problem with your customers,' adds Boudreaux.
You can drop a supplier for poor performance but strategically it is better to retain your vendors and not to flip around all of the time to replace them. By giving a warning, you give the supplier or vendor an opportunity to correct the problem. Use data that you have collected like on-time delivery rate, return rate, and number of supplier corrective actions to work with your suppliers, says Boudreaux. 'This process is not just about reviewing your suppliers but helping them to improve their performance.'
Dig Deeper: A Knack for Sweet Deals
7. Cut Loose Weak Links
No one of course should tolerate ongoing bad service. There may come a time when you have to let go of an underperforming supplier or vendor. 'We fired a vendor that was really cheap but was not meeting the ship dates. They were also non-responsive to complaints. They cut corners and handed in shoddy paperwork,' Greenblatt cites an example.
'We give a warning and then put them on notice or a short leash before we cut ties completely,' he explains. 'We will call the vendor and give them an opportunity to correct the situation. We will send them digital pictures, e-mails, and quality reports. So, there is no mystery when there is a challenge or an issue.'
The relationship with your supplier is a business partnership, says Wright, and if both parties are working to make sure that the partnership is a success it will be a success. In the long run, having a win-win supplier and vendor relationship will be a competitive advantage.
Dig Deeper: How to Build a Business Continuity Plan
