Suppliers, more or less - Increase or a reduction in light of standards requirements

[Kevin Mader]

I was curious to find out where the organizations we work for stand in regard to their supplier base. Have folks noticed an increase or a reduction especially in light of standards' requirements? Also, what were the reasons for their movement oneway or the other?

 

[Marc]

I'm surprised no one responded to this.

Most companies I visit, when I talk with the purchasing folks, say they are reducing or not changing suplier base. I really haven't asked anyone 'why'.

 

[Kevin Mader]

Marc,

Over the past two years or so, my organization continues to grow its supplier base. I thought that as folks realized the increased work for approving, developing, and evaluating supplier, they would put the brakes on adding a supplier at whim and work with the ones they had already established. This did not happen. Perhaps this is because a majority of the work befalls me, and since my boss is a practioner of "best price", it is easy to bring on a new supplier. Just a little bit of the Western Management Philosophy hanging on here, but I am trying like heck to change that. I must admit that though we grow our supplier base for the wrong reason (price), we have had excellent results on quality of product. It is the hidden costs that I believe are nickel and diming us to death (late start ups, delivery issues, etc.). I guess I wanted to see how other folks out there have been doing with this issue. Which is better (no secret with me)?

Back to the group...

 

[Marc]

Don't look at anything I say as other than anecdotal.

So - you're growing the list but not the actual number of active suppliers?

 

[Christian Lupo]

Our supplier base has been decreasing over the past few years. We are looking for suppliers who can supply the "complete package", price, on time delivery, service, etc.. They are out there but it takes work up front, and it may take as much as a year or two for a few competeing suppliers to decide how improtant our company is to our business. Eventually we find that one or two suppliers , that give us what we want. The less suppliers to control the more we save, in terms of allocating resources to "control our supplier". Yeah we have one or two sole source suppliers that slip through, but like I indicated there's only one or two. In addition, we are in the automotive industry. The B3 have mede it clear that they want to reduce their supplier base. We know who are competition is and we know we need to make our internal processes more efficient if we are going to get the contracts. I sometimes think that, that's teh purpose of QS-9000. QS-9000 is the rules of the B3, if you are willing to play you'll be certified, if not that's one less supplier they need to worry about.

I've also seen this while performing QS-9000 audits. After a QS doc review or pre-assessment some companies feel that their automotive business is not worth getting QS, and decide to drop their automotive business!
Again that one more supplier the B3 does not need to worry about.

 

[Kevin Mader]

Marc,

You're right for the most part, we replace one for another. The catch: we don't necessarily drop the old supplier. Especially in the case of spare parts, which we stock for 10 years beyond the end. Suppliers can remain on the list, lingering. In this case, evaluations and development is done based on usage (prioritized this way). Still, a bit to keep track of.

Christian,

You're right, play our way or there is the door. A real take it or leave it relationship. This part of QS gives me the bad taste in my mouth. I like QS better than ISO, but the way the dish is served is less than desireable. Not much of a partnership if only one partner makes the rules. But the pay can be worth the effort if you figure it all out. Perhaps that is why so many folks could care less about OEM work. Not interested with having rules shoved down their throats, no right or wrong about it. Funny thing: the OEM wants a structured 3 year deal with price reductions on the product. So even the "flash of cash" isn't much more than a glimmer, in my opinion anyway.

Back to the group...

[This message has been edited by Kevin Mader (edited 03-09-99).]

 

[Gordon]

What a great question... In my organization the supplier base did grow BECAUSE of QS-9000. What happened is that some of our suppliers (mostly the "Ma & Pa shops) refuse or do not have the resources to become QS-9000 certified. So, they are keeping their existing business. As for new products, we now have to look for bigger suppliers who are certified (or willing to become certified). I hope eventually the supplier base will shrink after the shake-out process.

 

[Don Winton]

Kevin,

We have tried (with success) to hold our supplier base at its current level for a variety of reasons. Primarily, most of our suppliers are dependable and well established. We have been doing business with most almost exclusively for a number of years. Adding vendors would add variation to the mix, and I do not like variation! Current quality levels are good, but on occasion delivery is erratic (primarily through miscommunication). I think I have solved this issue through improved information on PO’s, supplying the latest drawings with the PO, scheduled deliveries, clarifying requirements, etc.

As far as adding vendors for the wrong reason, there may not be a problem with buying on price tag alone, but that is not always the case. My biggest gripe is buying the same product from different vendors. At a previous employer, I had a very unpleasant experience with this. While in and of themselves, there was not a lot of difference, but as a group, the yields varied wildly. I tried explaining that by selecting just one vendor, at least the variation could be analyzed, worked on with the vendor and may even become predictable, as a group it could not (lot integrity tracking was not very good). I still do not know root cause (In my bosses’ own words, this problem did not warrant an investigation). As you know, increased variation will ‘nickel and dime you to death,’ if you are not careful.

Regards,
Don

 

[Kevin Mader]

Gordon,

Fortunately for us, our OEM has purchased an existing product so we haven't had to go to the Customer Supplier List as of yet. In general, QS has not increased our supplier base. All of our activity is a result of new product designs. As we pursue a position as a direct line supplier (currently we sell directly to the dealer) I believe we will experience some growth as you have. Thanks for responding, by the way.

Don,

Variation is the enemy (LOL)! Agreed with your point on multisourced suppliers for the same component. What a nightmare. It was while I worked for the Medical Device world. It got to the point that you wouldn't want to touch the project. The parts in spec didn't work well, the "junk" parts worked better. Where do you start with your suppliers in this scenario? Tell the guy making parts to spec to start making junk? Or do you begin by bringing the junk maker online with the in spec guy to start to figure out if it is a part problem or a design error? Solution: do nothing and scrap the product that does not work. Pretty expensive proposition at over $600 an instrument. We threw away thousands of units each year!

I have a new program to release soon and I have included some of the same points in your program. I want to have a bit more control in supplier selection to reduce the variation in areas outside of the product, such as price and delivery. I believe the goal is to create the working partnership with the win-win scenario. With the limited application here, you can see the difference in the face of your supplier. They appear happy to see you when you visit, or the flip of that, with good or bad news. Better all around.

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