Here's the problem. We are a small company with a vendor that suppliers parts to us that is a big company. They are currently backordered to us for about five months. This is causing us many problems with our customers. What kind or recourse do we have when our corrective action requests are ignored. They supply assembly plants, while we are a service parts provider. I understand their situation where they cannot shut the assembly plant down to provide service parts, but this is really getting to the point where this is costing us considerably. Our customer does not care what the problem is, only that we provide the service parts on time.

Here's the problem. We are a small company with a vendor that suppliers parts to us that is a big company. They are currently backordered to us for about five months. This is causing us many problems with our customers. What kind or recourse do we have when our corrective action requests are ignored. They supply assembly plants, while we are a service parts provider. I understand their situation where they cannot shut the assembly plant down to provide service parts, but this is really getting to the point where this is costing us considerably. Our customer does not care what the problem is, only that we provide the service parts on time.

huh, what can we suggest?

look for another vendor?
issue a big order to the vendor?
Negotiating with vendor for understanding?

it's hard to make a solution.
:(

What does your contract with this vendor say about this kind of situation? What recourse does it mention? What do your company procedures say regarding vendors who don't supply parts in a timely manner - do you have other vendors from whom these parts can be procured?

This is the only vendor that supples these parts. They are very complicated. Our internal procedures state that wil will measure our suppliers on delivery and if they are not up to speed, corrective action will be issued. We do issue but only receive verbal responses stating that they are working on it and will get the parts to us as soon as they can. Meanwhile we have vehicles down and it is blamed on us for not handling our suppliers.

This is the only vendor that supples these parts. They are very complicated. Our internal procedures state that wil will measure our suppliers on delivery and if they are not up to speed, corrective action will be issued. We do issue but only receive verbal responses stating that they are working on it and will get the parts to us as soon as they can. Meanwhile we have vehicles down and it is blamed on us for not handling our suppliers.

That is definitely a tough situation. It seems they have your company over a barrel while your customers are not happy campers at all.

What do your corrective action procedures say about this type of situation? What kind of actions can be taken? I'm sure you've already done all you can, though.

What if you forward your customers' complaints to the vendor and have them address the complaints? Would that work? :frust:

This is the only vendor that supples these parts. They are very complicated. Our internal procedures state that wil will measure our suppliers on delivery and if they are not up to speed, corrective action will be issued. We do issue but only receive verbal responses stating that they are working on it and will get the parts to us as soon as they can. Meanwhile we have vehicles down and it is blamed on us for not handling our suppliers.

It's rightly blamed on you, imo. When you enter into a relationship with a supplier who's much bigger than you, and has customers who are, this sort of thing is almost inevitable. If you have open purchase orders that include performance requirements, and the supplier isn't performing, there are legal remedies, but they'll be expensive and probably cut you off from the supplier completely.

What kind or recourse do we have when our corrective action requests are ignored. Small customers and big unresponsive suppliers are part of the business world. Other than developing an alternate supplier, or ordering mass quantities of the P/N to build an inventory with enough buffer, (assuming this supplier has some type of QMS certification), you could escalate your complain to their CB, which should be forced to "investigate" the issue. With this pressure and any evidence you could provide to their CB about CAR's being ignored, they might shape up...:notme:

Small customers and big unresponsive suppliers are part of the business world. Other than developing an alternate supplier, or ordering mass quantities of the P/N to build an inventory with enough buffer, (assuming this supplier has some type of QMS certification), you could escalate your complain to their CB, which should be forced to "investigate" the issue. With this pressure and any evidence you could provide to their CB about CAR's being ignored, they might shape up...:notme:

They would more likely fulfill current obligations and then drop the OP's company like a hot potato.

This is the only vendor that supples these parts. They are very complicated. Our internal procedures state that wil will measure our suppliers on delivery and if they are not up to speed, corrective action will be issued.

I know this doesn't solve the problem with the vendor, but we have this in our procedures as an "out" for those suppliers that are non-responsive to corrective actions

1.0 REMOVAL FROM APPROVED VENDOR LIST


1.1 IT IS COMPANY XYZ’S POLICY TO EXPLORE ALL POSSIBLE AVENUES FOR CORRECTION OF VENDOR PROBLEMS.

1.2 THERE MAY BE VENDORS THAT ARE SOLE SOURCE FOR SUPPLIES OR SERVICES WHICH HAVE BELOW STANDARD VENDOR RATING. AFTER ALL OTHER AVENUES OF CORRECTIVE ACTION HAVE BEEN EXHAUSTED, COMPANY XYZ MAY REVERT TO 100% INSPECTION AND ALL OTHER CORRECTIVE ACTION MEASURES SHALL BE SUSPENDED.

1.3 VENDORS OTHER THAN SOLE SOURCE WHO FAIL TO SHOW QUALITY IMPROVEMENTS OR LACK OF INTEREST IN COMPANY XYZ BUSINESS SHALL BE REMOVED FROM THE APPROVED VENDOR LIST.


Hope this helps a bit.

They would more likely fulfill current obligations and then drop the OP's company like a hot potato.

Yep.

Is there any way to make these parts in-house or by a third party? How about rebuilding the bad parts that have been removed? Is there some reason this supplier is the only one with the magic touch?

Are you doing warranty work that has been outsourced by the supplier? If so, you should have LOTS of leverage, but be careful how it is applied.

Do you have competitors who are doing the same type of business? Are they having problems? If not, why not? If so, then there may be a BIG market (read OPPORTUNITY!!!!!!!!) for whomever solves this problem. While the situation sounds like a pain, it may also be just the grand slam opportunity you should be looking for.

They would more likely fulfill current obligations and then drop the OP's company like a hot potato.That is true and likely. But Mike was asking for recourse options, he did not qualify the question as GOOD recourse...:tg: Between unhappy customers and unresponsive, hard-to-replace suppliers, there are no easy answers.

This is the only vendor that supples these parts. They are very complicated. Our internal procedures state that wil will measure our suppliers on delivery and if they are not up to speed, corrective action will be issued. We do issue but only receive verbal responses stating that they are working on it and will get the parts to us as soon as they can. Meanwhile we have vehicles down and it is blamed on us for not handling our suppliers.

I feel your pain, there are times when you deal with suppliers who are the only ones that you can get what you need from. My issue is not so much directly with how to handle the problem with your supplier, but again with a quality system that is written so that you are guaranteed to have a problem following your own policies. Be careful of how you document your policies.

It is my experience that when dealing with these suppliers, if you do your part, document the problems and your actions, and show that you have no real recourse, you will be OK as far as your registration goes. It does not solve your problem on getting product however, and it certainly does not help your customer. All you can do is to continue to look for alternatives, and use your planning to your best advantage. Good luck.

Hello Mike:

Is the supplier registered / certified to ISO 9001 or TS 16949? If so, contact their registrar and ask the registrar to investigate during their next audit. Complain to the supplier's registrar.

A question to the Cove - so in a situation like this where a large supplier doesn't care about a small customer, all of the principles of fairness, mutually benefical realtionships, contract review, commitments, process approach, system thinking, blah, blah, blah just goes right out the window?

Our response is that is the way it is? All of our discussions on reasonable processes, systems, methodology, etc. is junk when the supplier is large?

Do things like ISO 9001 only apply when the cusotmer is larger than the supplier?

May I use this response the next time a customer or auditor finds a problem with a supplier that is bigger than us? For example, a large supplier provides calibration service for the equipment they built and sold to us. They will not provide evidence of meeting certain TS 16949 requirements. Do I just tell the IATF and our registrar that they supplier is bigger than us and that is the way it goes?

Thank you,

Dirk

Hello Mike:

Is the supplier registered / certified to ISO 9001 or TS 16949? If so, contact their registrar and ask the registrar to investigate during their next audit. Complain to the supplier's registrar.

A question to the Cove - so in a situation like this where a large supplier doesn't care about a small customer, all of the principles of fairness, mutually benefical realtionships, contract review, commitments, process approach, system thinking, blah, blah, blah just goes right out the window?

Our response is that is the way it is? All of our discussions on reasonable processes, systems, methodology, etc. is junk when the supplier is large?

Do things like ISO 9001 only apply when the cusotmer is larger than the supplier?
It's pretty simple, Dirk. Money makes the business world go 'round. If you're a small fish in a big pond, you'll eat what the big fish don't get to first, if you don't get eaten yourself. As was pointed out earlier, calling the big supplier's auditor might result in some short-term relief, but note that the OP said that they are the only game in town. The choice is basically to accept the supplier's terms or lose access to the product.

I would think that the OP's registrar (if there is one) should be concerned about the predicament they put themselves in--being unable to provide products to their customers due to poor planning.

May I use this response the next time a customer or auditor finds a problem with a supplier that is bigger than us? For example, a large supplier provides calibration service for the equipment they built and sold to us. They will not provide evidence of meeting certain TS 16949 requirements. Do I just tell the IATF and our registrar that they supplier is bigger than us and that is the way it goes?

If meeting TS 16949 requirements is a contractual obligation, you would have a right to sue for specific performance, and you would probably win. You could also complain the the supplier's registrar. You would probably lose the supplier, which may or may not be a viable outcome.

Dirk, as Jim has said, the reason to stay in business is usually to make money. Our company does not supply directly to any OEM. That solves the problem of us deciding who gets the attention....but it still doesn't solve the problem for the little guy. He still has to deal with it but at a different level. Now he deals with a warehousing type entity instead of a manufacturer. The business community does not flourish on small business anymore.

Large corporate farms flourish, independent farmers are a thing of the past. Large box companies flourish, small specialty shops do not draw the majority of customers. Huge chains flourish, they have the purchasing power to provide goods at a consistent quality and lower price.

Is it right? who knows? It all depends on what side of the fence you stand. I hate to see it, but I know that it is a fact of life. Of course, I hated to see the one room school go by the wayside. And yes, I did attend one of those myself. I learned 8th grade math, history, english, etc. all while completing my fourth grade homework at my desk.

If you've done all the mail and email and phone stuff and all the other proper, polite and mushy-mushy stuff don't candy-&ss with them anymore and find a different vendor. Five months? Get real. The LA freeway system was rebuilt in less time than that after the '94 Northridge earthquake

Who's more important your supplier or your customer?

Apparently your supplier is making so much money they don't need you, or haven't you got the message yet?

If you don't dump them as a supplier what other recourse do you have, a harsh letter, threat and frown? Get it over with and move on.

Hello Mike:

Is the supplier registered / certified to ISO 9001 or TS 16949? If so, contact their registrar and ask the registrar to investigate during their next audit. Complain to the supplier's registrar.

A question to the Cove - so in a situation like this where a large supplier doesn't care about a small customer, all of the principles of fairness, mutually benefical realtionships, contract review, commitments, process approach, system thinking, blah, blah, blah just goes right out the window?

Our response is that is the way it is? All of our discussions on reasonable processes, systems, methodology, etc. is junk when the supplier is large?

Do things like ISO 9001 only apply when the cusotmer is larger than the supplier?

May I use this response the next time a customer or auditor finds a problem with a supplier that is bigger than us? For example, a large supplier provides calibration service for the equipment they built and sold to us. They will not provide evidence of meeting certain TS 16949 requirements. Do I just tell the IATF and our registrar that they supplier is bigger than us and that is the way it goes?

Thank you,

Dirk


Your point is correct, of course. But, the world is not always simple. Sometimes, the rules don't work...they simply don't produce the correct result. At times, a common sense solution must be sought out.

I wish the world were always fair and simple, but alas, to quote Sammy Davis Jr., "it ain't necessarily sooo..."

Jim and Steel Maiden:

Do both of you really think that I am not aware that in the industrialized world, the only thing that matters is short term financial gain? Do you some how think I am not sensitive to that? I am playing the devil's advocate since we expound upon the principles of ISO 9001, systems thinking, process approach, teams, SPC, etc. But when the rubber meets the road, ohhh no, it is all about fear, intimidation, authority, and short term financial gains. Mutually bneneficial, long term relationships where we care about the interaction of our sytems? Give me a break. What was the P&L statement for the last 3 months? How ios ourt stock doing today?

The question was asked and I provided a possible course of action. At the last US TAG to ISO/TC176/SC2 meeting, we spent a siginifianct amout of time taking about "output matters." Output of the ISO 9001/ registration world matters. If it doesn't matter, then the industry will go away. Survival is not required.

As is driven into us by the Cove, ISO 9001 registration does not matter. It is a piece of paper that initially opens the door for business but in no way assures "quality" output. The entire principle that an effective process results in conforming output is not true if the evaluation of the qms is faulty and the actions of the owners of the qms are mypoic.

And if we do not provide feedback to the registars, then don't expect anything better or any improvement. Ask for that ISO 9001 certificate to "meet the requirements of ISO." Do the survey thing. Get the worthless piece of paper. And quit complaining that the big supplier won't work with you. But please accept their cetificate as evidence that the supplier is a good supplier.

Regards,

Dirk

Mike,
Does this sole supplier have a capacity issue? If the sole supplier has a capacity issue, will it effect the assembly plant if the get a spike in production (the supplier might want to know this).
Is it possible to set-up a meeting with assembly plant to evaluate if there is any type on leverage the plant can use with the sole supplier?

Phil

I appreciate all of the comments so far. A similar situation is our suppliers are required to be certified to TS16949 of ISO9001. We send out the letters asking for their certificate or plans to be certified. One of our suppliers is Intel. They are not certified, nor do they plan to be certified. They are the sole supplier of a chip and unless we want to spend millions for another IC supplier to tool up, we must accept their response.

As for our current situation, our customer has gotten involved and the supplier seems to be coming up with a plan to ship us the backordered parts. This will get us through for now, but the backorders will keep rearing their ugly head in the future.

our customer has gotten involved and the supplier seems to be coming up with a plan* to ship us the backordered parts. This will get us through for now, but the backorders will keep rearing their ugly head in the future.*emphasis added by me.

Good luck. Involving your customer directly with your supplier is not much different than involving their CB (if they have any). It is just a matter of adding pressure to the supplier, by whom they might feel compelled to react to. Like Jim mentioned, the added pressure might backfire and accelerate that supplier from dropping you as a customer.

The underlying problem is that your orders for this part are not very attractive to that supplier (and they might have good reasons for that) and your organization gets no real attention or priority. Like you said, unless the underlying situation is fixed, I don't see a systemic solution. It will continue to be painful.

Is there something that prevents them from providing higher volumes of parts in your order? Would there be benefit in maintaining a high volume of stock of these parts as compared to ordering when stock is low?

We have thought of that. It is not healthy for the company to hold that much inventory. About sixty days worth is our max. Tha would make things much easier.