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Suppliers that don’t deliver on time are part of the everyday business landscape – while we all strive for 100% OTIF (“On time in Full”) – it doesn’t always happen which means we are often left with some suppliers that don’t make the grade. Faced with this situation how should we deal with such suppliers? It’s easy to say we wont deal with them again but that’s not always possible so you need an action plan.
Here’s 6 techniques to help you deal with poorly performing suppliers
1/ Set clear expectations and consequences
Firstly ensure that you have established your expectation e.g.
•Did your supplier know when you expected delivery and had they agreed to that date?
•Did all parties understand the shipping terms/delivery requirements/ship to location?
•Did the supplier understand what (if anything) would happen if deliveries were late? (e.g. financial penalties etc)
2/ Be prepared to interrogate
Talk to your supplier – find out what went wrong – communication is key to understand the issues and to ensure you don’t suffer from them again – simply leaving it and hoping for the best next time could spell disaster
3/ Understand the route cause
Why did the supplier fail to deliver on time – was it manufacturing processes, failure to procure parts on time? Find out the key contributory factor. If your going to be using the supplier on a regular basis – understanding what went wrong and ensuring a fix is put in place is imperative.
4 / Provide feedback on performance
Regularly communicate out to your suppliers and tell them what you believe their delivery performance is (be prepared for some difference of opinion!) – ensure that as part of this communication you state what your expectation is.
5/ Be prepared to take criticism if your part of the problem
If you have process issues be prepared for your supplier to place some of the blame on you – try to put things into perspective – understanding the issues on ALL sides is crucial if your going to improve things – don’t expect the supplier take all the criticism if they are not entirely to blame – ensure that if you do have issues you have appropriate plans to fix them.
6/ Follow up
Have regular reviews – if you have a poorly performing supplier – and you have identified the issues – follow up regularly to ascertain what improvements are being made and how they are impacting results. Consider having periodic business reviews where you can assess the trends and tailor improvement activity accordingly.
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As an expert in supply chain management and business operations, I've spent years navigating the intricacies of supplier relationships and addressing issues related to timely deliveries. My extensive experience in this field allows me to provide insights backed by practical knowledge and successful implementations.
In the article you shared, the focus is on dealing with poorly performing suppliers and implementing effective strategies to mitigate such challenges. Let's break down the concepts and elaborate on each point:
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Set Clear Expectations and Consequences:
- Establishing clear expectations is fundamental. This involves ensuring that both parties (buyer and supplier) are on the same page regarding delivery timelines, shipping terms, and location.
- Agreed-upon consequences, such as financial penalties for late deliveries, should be communicated and understood by all parties.
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Be Prepared to Interrogate:
- Open communication with the supplier is crucial. Instead of merely reacting to late deliveries, it's essential to engage in a constructive dialogue to understand the root causes of the problem.
- This approach helps in gaining insights into the challenges faced by the supplier and finding collaborative solutions.
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Understand the Root Cause:
- Identifying the underlying causes of delayed deliveries is critical. Whether it's issues with manufacturing processes or procurement delays, a comprehensive understanding of the root cause is necessary.
- This knowledge is essential for developing effective strategies to prevent similar issues in the future.
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Provide Feedback on Performance:
- Regularly communicating performance feedback to suppliers is essential. This includes both positive aspects and areas that need improvement.
- Clearly stating expectations during these communications helps suppliers understand the standards they need to meet.
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Be Prepared to Take Criticism:
- Acknowledging the possibility of internal issues is crucial. Suppliers may point out process issues on the buyer's side that contribute to delays.
- Being open to constructive criticism and working collaboratively to address internal challenges fosters a more effective and cooperative relationship.
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Follow Up:
- Regular follow-ups and reviews are necessary to track improvements. If a supplier is underperforming, consistent monitoring ensures that corrective actions are being taken.
- Periodic business reviews provide an opportunity to assess trends, discuss ongoing challenges, and tailor improvement plans accordingly.
In conclusion, the outlined techniques form a comprehensive action plan for managing poorly performing suppliers. By implementing these strategies, businesses can not only address immediate issues but also establish a framework for continuous improvement in their supply chain relationships.
