Professor Martin Christopher has a famous saying: “The competition in 21st is the competition among supply chains rather than that among enterprises.

In international business, no matter you are an exporter, or an importer who has manufacturing partners overseas. The smooth running of your organization can not be guaranteed without a well cooperated supplier.

Your upstream suppliers, downstream distributors, retailers, end users, as well as forwarders, logistics companies, third-party marketing companies are all an integral part of your supply chain structure. The resources, competitive advantages of these roles ultimately determine the competition of your enterprise. Top 500 enterprises, such as IKEA Walmart, are all supply chain management resource integration experts, they do not establish factories, but they make the factories as a part of them.

Here comes the question: how to manage the relationship with your supplier?  (We will check study through an example from another article, thank you.)

Let’s take a case for example:

Contractor L and supplier B.

Products category: Sheet Metal Assembly parts for smart bin.

L offers products documents which describes technical requirements completely. Supplier B confirmed PDs by signed it back. Sample was approved. First shipments- 500 pcs sheet metal assembly smart bins arrived at L’s warehouse. After inspection, 3 sets are not 100% compliance with tech requirement.

The root cause of the problem is that production process control is not standard. Most of which is caused by limited management level.

Supplier management includes two stages: one is potential supplier development, the second stage is relationship management which exists every single communication with the supplier.

Let’s take a look at the development flow as below chart:

Stage 1 Supplier Information Collected Supplier Information Table
Stage 2 Background Investigation Important Elements- focus on risk Point
Stage 3 Overall Assessment for the supplier Members from other department should be includes, besides purchasing team
Stage 4 Quotation/Negotiation Negotiation helps a lot for better understanding about the potential supplier
Stage 5 Sample Test/ Trial Order Sample should be produced with the same technique as lot production
Stage 6 Secondary Assessment, visiting is necessary More accurate judgement about the supplier
Stage 7 Supplier Relationship Confirmed Add to supplier list and conduct management in following purchasing course

After being identified as a cooperative supplier, SWTO analysis should be conducted, fully exploring supplier cooperation advantages, at the same time, providing guidance for their disadvantages.

For example, supplier A has a delivery plan for product B which is a new style for them. Compared with regular repeated orders, the risk indicator is higher. In this situation, as buyer (importer), doing production process control guiding is necessary and important. PFMEA analysis is a good tool here, from this table, we can see whether the supplier has made sufficient preparation for the risk of each manufacturing stage (step).

In the process of supplier management, there are many brilliant tools and wonderful cases, through learning and practicing, we can keep improving our management skills, making the systems work better and better.  So as to enhance the competitiveness in the supply chain.

What’s your story about supplier management? Any thing confusing?

Tell us, we are available here always, just for you.