Performance means taking inputs (such as employee work, marketplace requirements, operating funds, raw materials and supplies) and effectively and efficiently converting them to outputs deemed valuable by customers.
It’s in your best interest to select and work with suppliers in ways that will provide for high quality.
Supplier performance is about more than just a low purchase price:
It used to be common to line up multiple suppliers for the same raw material, over concern about running out of stock or a desire to play suppliers against one another for price reductions. But this has given way, in some industries, to working more closely with a smaller number of suppliers in longer-term, partnership-oriented arrangements.
Benefits of supplier partnerships include:
Establishing an effective supplier management process requires:
The manufacturing industry is in a special situation: Much of what manufacturers purchase is then incorporated into their products. This means there is a higher inherent risk, or potential impact, in the manufacturing customer-supplier relationship. For this reason, manufacturers often develop detailed supplier-management processes.
Many of those same methods have been adapted by non-manufacturing organizations. This is especially true of partnerships and alliances, which are becoming a widespread way of sharing expertise and resources — and spreading risk — in a complex global environment.
Excerpted from The Certified Manager of Quality/Organizational Excellence Handbook, pages 490-491.