Tuesday, June 30, 2020

Some Supplier Expectations Ideas Examples

Some Supplier Expectations Ideas Examples
Dr. Tom DePaoli

 “Our mission is to --Foster an atmosphere conducive to continuous improvement, cooperation, and mutual respect among employees, customers, and suppliers.”

The following is a general list of our expectations of a supplier. It is not all inclusive. We ask you as a supplier to respond to every expectation. Note that the first five expectations are tracked by us and summarized on a monthly basis. This is performed for our major suppliers and is extremely important for our overall success.

1. Delivery must be outstanding! The shorter the cycle or delivery time the better we can meet our customer’s needs.  Suppliers’ delivery performance is tracked by purchase order and by the number of line items received on time. This tracking is based upon the want date indicated in the purchase order. We encourage suppliers to provide us copies of their own internal reports that track performance. Suppliers that have the capability to deliver directly to our in plant end users can significantly reduce our transaction costs. We are a dynamic company in the growth stage that challenges our suppliers with formidable delivery dates. If you cannot provide us a specific part we would expect your strong commitment in obtaining the part from another source or supplier. Lead-time reduction is essential for our continued competitive viability. As an OEM we have penalty clauses for late equipment delivery.

2. We want quality certified suppliers. We prefer ISO 9000 certification status. Inform us if you are already quality certified by other customers or industries. Give us the names and contacts of customer references that have certified you in quality. We want to know about your quality certification process.  We need a thorough description of your quality program and copies of key quality documents. We are interested if you have recently received any quality based awards. We expect that you possess a supplier selection process that emphasizes quality.  We want your quality level to be such that it eliminates the need for our internal  inspection. A supplier’s number of rejects and number of returns is tracked by us. We insist that suppliers correct Nonconforming Materials (NCMR’s) as soon as and expeditiously as possible.

3. Back orders are an administrative nightmare for both a supplier and customer. We track the number of line items shipped complete on the first shipment. First time “no problem” fill rates are crucial. 

4. Accuracy in receiving documents is indispensable because of the fast pace of our growth. We track the number of packing slip errors, the number of items shipped in error, and the number of items priced incorrectly. These are administrative errors that cost us time and energy to process. Suppliers need to correct these mistakes with the minimum of disruption to us. The packing slip must have the date shipped, supplier name, invoice number, purchase order number, shipped quantity, backorder quantity, and the part description which includes our Inc. part number. The purchase order number must be clearly designated on the outside of the box to help us find a specific part.  Other information you need to include if available is the name of the person who ordered these parts.  We will be going to a bar coding tracking system and expect all our suppliers to have bar code capability.

5. We expect professionalism from all our suppliers. We do a qualitative evaluation of supplier response to phone inquires, the packing of items, ability to follow shipping instructions and pricing competitiveness.

This completes the expectation areas that we formally track with major suppliers. The following expectations are also very important considerations from our suppliers:

6. We count on “most favored” pricing status. This means that you extend to us the lowest best price and margins that you would grant to your very best customers. We do periodic benchmarking of pricing to verify competitive pricing. We as a practice ask for a comprehensive fixed price list for our parts for a period of one year. We keep a three year history but would expect that you work with us to develop a history of usage and pricing. Joint updating of our contract files and computer systems is an anticipated outcome of our efforts. Written justification of any price increase is required. Price increases must be mutually agreed to by both parties. Suppliers must agree to work with us to eliminate inflationary price increases and to give us alternatives to drive down the overall supply chain costs.

7. We are interested in a “turnkey” type approach to inventory. This would include concepts such as continuous replenishment, on-site stocking, consideration of consignment, elimination of re-stocking charges, recommendations around storage racks, assistance in disposing of obsolete parts, and the capability to expand the parts that you can provide to us.

8. We need suppliers who can eliminate all transaction costs. Your must have the capability to accept purchase credit cards. Our purchase card brand is American Express. EDI capability and installation expertise is a plus. We would like systems purchasing capability along with electronic mail and electronic catalogue options.

9. Our financial standard financial terms are 2% 15 net 60. We will not normally grant any down payments or prepayments. Our credit rating is outstanding. We require full financial disclosure of a supplier’s financial status to include audited financial reports, SEC form 10K and 100, credit rating documents, and corporate financial records on file. We also insist on disclosure of any relationships with our competitors. In addition, all duty drawback rights must be assigned to us. Your price list must include the country of origin and reference the original manufacturer’s part number and cross reference it to our part number. You need to make available to the assigned agent of ours all import documentation required to facilitate a manufacturer’s duty drawback. We sell internationally and expect suppliers to meet the differing language requirements of our international customers which would include CE Mark and international type contractual specifications.

10. We seek suppliers that can help us continuously improve. In order to encourage this behavior we are willing to split hard improvement savings with you 50-50 for the first year of these savings. We need your help in educating end users, designing manuals, working with cross functional teams, and introducing new products. We want to take advantage of your technical expertise. We value suppliers with good technical services and those who can keep us informed of leading edge technologies that we can employ.

11. We are open to long term relationships in a partnership mode. We seek long term contracts signed with partners whenever feasible (three years or longer). Any prior track record of business with us and prior partner relationships is helpful. We prefer an accounting of your partnering experience along with specific contact listing of references that can verify your performance as a supplier in a partner or alliance relationship. We look forward to our suppliers educating our plant personnel on the benefits of partnering, open to expand the bucket of goods that they can provide us, willing to engage in an “on-site” supplier relationship, and agreeable to us visiting their plant and assisting us in streamlining the supply chain. The startup of a partnership relationship is extremely resource intensive.  A supplier must dedicate resources during the startup phase.

12. We are trying to pick the “best of the best” of world class suppliers for us. We would like to know about any best practices that you are using. We want to know about the stability of your workforce and commitment to progressive organizational design and your employees. Current business capacity and future growth plans are important to help us understand your capabilities. Shutdown timing information and your status as a union or non-union manufacturer is requested.

13. We strongly urge our suppliers to conduct themselves according to the ethical standards noted by ISM.

https://www.amazon.com/author/tomdepaoli    = Dr. Tom’s Amazon author’s page
http://www.apollosolutions.us  = website of Apollo Solutions his business
drtombooks.com  = more information on Dr. Tom’s books

Contact Dr. Tom = thomasdepaoli@yahoo.com drtombooks.com for newsletter sign up https://drtombooks.com/contact/ My Books link: https://www.amazon.com/Tom-DePaoli/e/B003XSV1IQ

Sunday, June 28, 2020

How to Avoid a Supply Chain Apocalypse

How to Avoid a Supply Chain Apocalypse

What are some tactics to avoid a supply chain meltdown especially an unforeseen or calamitous event? None of us wants to experience a supply chain zombie-like apocalypse. Many organizations are starting to use ISO 28000 certification to assist in reducing supply chain risk. I recommend an alternative multi-faceted approach. There is no one size fits all in the supply chain. As the importance of supply chain management grows leaps and bounds; the supply chain professional must develop multiple options and proficient tactics to insure the continuity of the supply chain.  A key element in lessening supply chain risk is to have an alternative or backup supplier. With many organizations sole-sourcing now; having a backup supplier may seem like an antiquated traditional tactic, which has no place in a deep relationship or partnering strategy with a supplier.  Be advised it is necessary.

There are also many risk assessment methodologies available for the supply chain professional. The insurance and investments industry have many models to assess risk. The issue, as usual, for the supply chain professional, is finding the time to assess the risk and to plan for alternatives. I recommend a gradual stair-step approach. First insure your sourcing methodology addresses risk and the need for backup suppliers. Focus on your critical materials and services, not the typical off the shelve items.  Do not be afraid to ask your prime supplier or a distributor for a recommendation for a backup supplier or alternative materials. Complete a small actual order from the backup supplier to insure their capability to deliver.

In my book, Avoiding a Supply Chain Apocalypse, I note that there is no single silver bullet or quick fix, but I suggest a multi-faceted diverse approach to avoiding supply chain meltdowns. As the importance of supply chain management grows leaps and bounds; the supply chain professional must develop multiple options and proficient tactics to insure the continuity and sustainability of the supply chain.
Many organizations have in place a crisis management team that has written procedures for incidents like threats to employees, gunmen intrusions etc. Often they are led and formulated by Human Resources. 
The supply chain organization should also have a crisis management team that creates written documentation for various supply chain meltdown scenarios. This is a great subject to network with and gain knowledge from other supply chain organizations.
Finally, a supply chain organization can never completely eliminate risk but it can plan ahead for the inevitable disruptions to the supply chain. Take to first small steps before misfortune strikes.

Tom DePaoli

Contact Dr. Tom = thomasdepaoli@yahoo.com drtombooks.com for newsletter sign up https://drtombooks.com/contact/ My Books link: https://www.amazon.com/Tom-DePaoli/e/B003XSV1IQ

Saturday, June 27, 2020

Procurement Can Bootstrap Transformation!

Procurement’s role in an organization touches across many departments, suppliers, countries, and competitors. This situation requires that procurement professionals possess excellent communication skills and the ability to quickly adapt to different cultures, perspectives and crises.
Author: Dr. Tom DePaoli, Author & CEO at Apollo Solutions
Transforming your own organization’s culture is a grueling challenge. Expecting procurement to “bootstrap” or use its own resources rather than external help, in organizational transformation, is a demanding goal. Procurement, however, has many of the qualities and capabilities to act as the prime catalyst for this quest.
Many procurement organizations have radically changed or reengineered themselves from traditional clerical type organizations. The supply management or supply chain concept is rapidly becoming the norm. This type of change was monumental and transformative. Could procurement pull the bootstrap off? Most would say this is highly unlikely, but below are some tactics that could lay the groundwork or accelerate a successful transformation of an organization. Many have been previously used to transform purchasing into supply management.
Breaking down department silos by involving diverse cross-functional teams in sourcing decisions.  Including internal and external customers in as many decisions as possible is a sound empowerment tactic that pays off dramatically. Teamwork in such efforts deepens the understanding of participating employees in the overall procurement cycle and helps imbed the concept of total cost of ownership. Incorporating grassroots efforts to ask internal customers how procurement can help simplify purchasing transactions
People usually appreciate colleagues who try to make their jobs easier and are not afraid of criticism. Making all transactions pain free, fast and intuitive is a strong way to increase value of and improve respect for procurement. Acquiring strong base business knowledge for procurement by working side-by-side with production and sales, both improves product knowledge and enhances procurement professionals’ credibility and business perspective. This helps expand the understanding of the voice of the paying customer. Marketing the importance of procurement and the supply chain with visible metrics
This creates a clear focus that others appreciate. Procurement has to aggressively market its importance to the organization and develop a formal internal marketing plan of its goals. Crafting a long-range procurement plan that aligns with the organization’s vision, mission and strategic plan
This step helps to justify procurement’s efforts to the rest of the organization. Communicating with colleagues on a one-on-one basis should be especially encouraged. This gives procurement professionals a chance to make their pitch to as many folks as possible and develop strong relationships. Conducting cross functional training
Inviting people from other departments to participate helps sell procurement’s goals and metrics. Vital feedback can be obtained on the usefulness of procurement systems and procedures in such sessions.
Developing leadership skills and practicing leadership in groups.
This final, but most important step, is a good long-term skill-building course of action for all of procurement. Most experts agree that one skilled leader can turn an organization around. Procurement needs to be ready with leadership skills to help lead or encourage the organizational transformation process.
Any department would face and probably fail at the nearly impossible task of bootstrapping the transformation of an organization. Procurement, however, would be the best place to start the transformation quest and develop the passionate and powerful leaders required to execute it.

Contact Dr. Tom = thomasdepaoli@yahoo.com drtombooks.com for newsletter sign up https://drtombooks.com/contact/ My Books link: https://www.amazon.com/Tom-DePaoli/e/B003XSV1IQ

Thursday, June 25, 2020

How Can We Get Young People Interested in Supply Chain Professions?

How Can We Get Young People Interested in Supply Chain Professions?

            Many high school and college students are unaware of all the opportunities in the supply chain. Their concept of it tends to be warped by media stereotypes and the lack of career counselors who really understand the depth and breadth of all the possibilities and positions in the supply chain. Many students have not even considered the option of starting a career in this growing and dynamic arena.
            Some recent surveys of high school seniors show a general lack of understanding of the possibilities of logistics careers. Supply chain jobs are rarely mentioned by high school counselors or even at many college level job fairs. The only active promoter of supply chain careers that I could verify was ISM or the Institute of Supply Management.  So what can supply chain professionals do to encourage careers in the supply chain?
            We should use similar tactics that universities and colleges now use to recruit students. This recruitment does concentrate on the Internet. Just about every potential future supply chain student has a Facebook, LinkedIn, Instagram or other internet sites. First, we should consider creating an employment brand to attract students to supply chain careers. We should use social networks to connect better with students and generate interest. Local ISM affiliates should have parts of their websites geared to attracting students to supply chain professions.  The ISM affiliates should try to build a virtual relationship with interested students. The breadth and depth of possible supply chain professions does create a challenge, but this variety should attract even more students. Of course virtual job fairs are becoming more common; so cooperation and participation from supply chain employers should be encouraged.
            We cannot just stop at the Internet. Traditional tactics like tours of supply chain employers, internships, scholarships and educational seminars should also be employed. It is obvious that we have many tactics that could influence students to consider a supply chain career. The challenge will be to measure the effectiveness of these tactics.  When researching this blog post, I was astounded by the lack of effort and coordination in encouraging supply chain careers. There is literally nowhere to go but up.
            Finally every supply chain employee should act as an ambassador for a supply chain career and encourage young people to consider the possibility of an exciting an varied career in the supply chain. People are the most important aspect of supply chain optimization.

Contact Dr. Tom = thomasdepaoli@yahoo.com drtombooks.com for newsletter sign up https://drtombooks.com/contact/ My Books link: https://www.amazon.com/Tom-DePaoli/e/B003XSV1IQ