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
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