This is a very critical process in managing businesses, your suppliers are key stakeholders to your business as they could make or mar your business, hence your suppliers should see you as partners.
This process should be managed from a partnership or strategic alliance perspective, see your suppliers as partners, this would go a long way in reducing your business risk.
How do you bring suppliers onboard?
Follow a qualification process that you have designed for your business, it should contain a minimum of the below:
- A pre-selection process defined by your procurement/purchasing team, they would help identify suppliers who can meet your needs or solutions required.
- Share a questionnaire (questions to gage their areas Strength and weakness) with supplier to be sure they can meet your minimum requirements.
- Review responses to determine potential suppliers also use a risk based approach.
- Sign a Non-Disclosure agreement with them (this will breed more openness)
- Share specifications of what you plan to order from them, align and agree on these specifications.
- Carry out an audit of their process vs your defined business standards
- Take them through an approval process based on risk matrix used.
- Sign a quality agreement with supplier.
How do you keep them as partners?
- Develop a robust onboarding plan for your suppliers and take them through it.
- Develop a risk file to define and properly map all your suppliers as either Low, medium or high-risk supplier this will define what approach you would follow to keep them consciously at LOW RISK.
This risk file should contain inputs from the below as a minimum:
- Risk level of materials they are supplier.
- Transportation/logistics risk associated with delivery.
- A supplier scorecard to help understand how well they are underdelivering, meeting or exceeding your requirements such as Pricing, how they deal with crisis's, financial stability e.t.c.
- Result of last audit ratings.
Routine steps to take to keep partnership strong
- Schedule visits to discuss growth and continuous improvement opportunities
- Schedule repeat audits based on pervious audit reports
- Build programs to develop your suppliers where you are strong.
Note: It is important to put a process in place for delisting or discontinuing a supplier so its seamless and painless.
About the Author
Dominic is a process & quality consultant with over 10 years’ experience leading various continuous improvement in world-class organizations. founder of Doruem Process Services and Co-Founder to Nodal Point Engineering, with core competence in manufacturing excellence and digital manufacturing.
You can reach him on LinkedIn here.