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David vs Goliath (Large Suppliers vs Low Volume Purchasers)

#1
I work for a large Fortune 500 company with dozens of manufacturing locations residing in over a dozen countries. Due to the performance characteristics of certain materials we are procuring, we are often relegated to sourcing these materials from what we call Industry Leading suppliers such as 3M, GE, Dow, etc.

Unfortunately, due to the risk profile of our products where these materials are going into, we are requesting them to certify to chemical regulations that are beyond their standard scope of certification. The suppliers claim that they comply, however, they are not willing to sign on the dotted line to it. In fact, it is extremely difficult to get them to do anything aside from their "take it or leave it" policy because we are the David and they are the Goliath.

We can give them the list of chemicals we are concerned with, however, they will only state these these chemicals are not intentionally added. If it gets into the supply chain via contamination, we will never know unless we screen for it. Screening for hundreds and hundreds of chemicals is just not feasible to do on hundreds of different materials.

While we feel fairly confident that these materials would comply with our requirements (because these are industry leading suppliers with world-class manufacturing facilities), there is no way to verify this without conducting an extensive chemical analysis.

They will not let us into their facility to conduct an audit and they will not provide us a chemical bill of materials due to IP concerns.

What would you do?
Would you develop a rigorous screening process with specific pointed questions on a survey?
Would you feel comfortable with their ability to remain compliant with minimal oversight?
Would you force yourself to choose a different supplier that is more willing to meet your demands even though the performance falls short?
How would you handle a supplier where they are 2-3 degrees removed from their parent company? Would they be treated any differently from the parent?
 
R

Reg Morrison

#2
I work for a large Fortune 500 company ....SNIP.... because we are the David and they are the Goliath.
...SNIP....

What would you do?
As you work for a very large organization, how can you deem yourself a "David"? Why aren't your corporate Procurement folks putting pressure on your suppliers? If you work for a very large corporation, use that to leverage your requests.

In addition to escalating the issue to your corporate folks, I would try the route of engaging with those suppliers ISO 9001 registrars (if they are certified). If you put requirements for certification of the material in your purchasing documents to those suppliers and they accept the order, they have to fulfill it. If they fail to provide you with the certificates and remain unresponsive to your complaint, their certification bodies should take action, based on your feedback to them. The registrars HAVE to take action on feedback from their registered clients customers and stakeholders. If their registrar don't take action, you can escalate the issue to the registrar's accreditation bodies.
 
#3
I can see how your position and challenge might make you feel like you're in David's shoes, but as you describe it you're a lot closer to the size of of your supplier than I will ever experience.

I am familiar with this challenge but from the point of view of an ant to a giant.

The above poster makes a good point - is the requirement in your purchase order as a line item? Or is it just buried in your terms and conditions? That's the first challenge you face.

Escalating to the registrar is an amusing concept. I'll sit back and watch how that works out. You're probably right in that they could decide to do without your business, but it sounds like you're big enough that they'd rather not.

Get the requirement as a line item on the P.O. and see what happens.
 
Last edited:

Marc

Captain Nice
Staff member
Admin
#4
<snip> We can give them the list of chemicals we are concerned with, however, they will only state these these chemicals are not intentionally added. If it gets into the supply chain via contamination, we will never know unless we screen for it. Screening for hundreds and hundreds of chemicals is just not feasible to do on hundreds of different materials. <snip>
What is your risk if contamination does occur?
Are there alternate suppliers of the same product?
 
#5
As you work for a very large organization, how can you deem yourself a "David"? Why aren't your corporate Procurement folks putting pressure on your suppliers? If you work for a very large corporation, use that to leverage your requests.



In addition to escalating the issue to your corporate folks, I would try the route of engaging with those suppliers ISO 9001 registrars (if they are certified). If you put requirements for certification of the material in your purchasing documents to those suppliers and they accept the order, they have to fulfill it. If they fail to provide you with the certificates and remain unresponsive to your complaint, their certification bodies should take action, based on your feedback to them. The registrars HAVE to take action on feedback from their registered clients customers and stakeholders. If their registrar don't take action, you can escalate the issue to the registrar's accreditation bodies.

Thanks everyone for the responses.

We are a David because the materials we are purchasing from them make up a small % of their business. In some cases not enough to make any difference whether we purchase or not.

We have escalated this to corporate and the message is the same. Source from a different supplier. Engaging with the ISO registrars is definitely a unique approach. We do offer them our own certificate to sign off on, they often refuse our terms and will usually provide their own terms. They will not accept the order on our terms. It is always on their terms. Hence why in this case we are the David. Note that in many other cases we are definitely the Goliath.
 
#6
I can see how your position and challenge might make you feel like you're in David's shoes, but as you describe it you're a lot closer to the size of of your supplier than I will ever experience.

I am familiar with this challenge but from the point of view of an ant to a giant.

The above poster makes a good point - is the requirement in your purchase order as a line item? Or is it just buried in your terms and conditions? That's the first challenge you face.

Escalating to the registrar is an amusing concept. I'll sit back and watch how that works out. You're probably right in that they could decide to do without your business, but it sounds like you're big enough that they'd rather not.

Get the requirement as a line item on the P.O. and see what happens.

It is most definitely a line item. In fact we give them a list of our terms which we wish them to comply with and they refuse to accept them. They do acknowledge compliance with most of them, but cannot agree with our other terms such as assurance these hundreds of chemicals on our banned list will never be present. Some of these chemicals are just never tested for by their suppliers at all but could theoretically be introduced as a contaminant.
 
#7
What is your risk if contamination does occur?

Are there alternate suppliers of the same product?

Risk is a product recall or fines and lawsuits. Think CPSC, FDA or Prop65.

Yes there are alternate suppliers of the same exact product but they do not perform nearly as well.
 

John Broomfield

Staff member
Super Moderator
#8
Mr Sandman,

Can you specify these purchased materials as if they are the result of special processes (see clause 7.5.2)? Chances are they are the result of designed processes anyway.

You would invest in studies of these purchased materials to test for the contaminants. Do this to validate the design of your suppliers' production processes for your particular purpose.

Then specify that you are to be informed of any planned (and actual!) changes to input materials and processing so you can re-validate. You may have to pay extra for this service. If this is too risky for you then design your study also to determine inexpensive tests to monitor key characteristics of these incoming materials.

Failing this, find a supplier that values your business and adjust your supplier selection and re-selection criteria accordingly.

This latter option may require your product designers to change the design of your product instead of relying on suppliers who do not care about your requirements.

John
 
#9
It seems to me an overriding factor of dealing with 3M, DuPont, etc. is that the batch you buy today will be consistent with the batch you buy two years from now. Thus, armed with confidence of consistency of product strength and purity, it makes sense to take on the expense of independent laboratory analysis of a product sample BEFORE entering a multi-shipment order for a year or more supply of product. If the analysis is clean, you can probably count on the consistency of the giant to continue to deliver clear product without continually sampling and testing individual shipments.
 
R

Reg Morrison

#10
It seems to me an overriding factor of dealing with 3M, DuPont, etc. is that the batch you buy today will be consistent with the batch you buy two years from now. Thus, armed with confidence of consistency of product strength and purity, it makes sense to take on the expense of independent laboratory analysis of a product sample BEFORE entering a multi-shipment order for a year or more supply of product. If the analysis is clean, you can probably count on the consistency of the giant to continue to deliver clear product without continually sampling and testing individual shipments.
Highly questionable proposal, in my opinion. Supplier performance and batch conformity (especially in formulated chemicals) is like the stock market: past performance is no guarantee of future results. If size and reputation of companies would warrant their products, Enron and Arthur Andersen would, not only still be around, but be thriving now.
 
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