Supply Chain Effectiveness – Vendor Selection & Engagement


Following on from the blog “Driving Fundamental change in Supply Chain Effectiveness” where I discussed the first of the six key segments in supply chain effectiveness, Product Design and Considerations, I am now going to share my experience on the second of the six segments.

Vendor Selection & Engagement

There are many criteria that come into play when selecting or sourcing component and OEM suppliers but some important elements are often overlooked or not given the priority that is essential when creating an effective supply chain. I suggest that time and effort must be allocated to selecting those suppliers who know how to operate real-time integrated business management solutions through seamless electronic data interfaces (EDI) and once data is received can complete analytics that allow effective decision making.

It is now important to build a collaborative relationship, a win-win scenario, founded upon trust and respect to ride the wave of demand peaks and troughs, to resolve inventory exposures be they excess or insufficient, to have an openness that allows freedom to investigate challenges that can impact cost, quality and service, be that ongoing continuous improvement (lean) programs or just engagement to resolve test yield occurrences driven either by batch related material or subtle changes to the manufacturing process.

My personal philosophy is educated by the fact that I have operated on both sides of the business, I have managed both the OEM and the outsourced model and know that best results are achieved when there is an openness and partnership ethos that goes beyond the normal non-disclosure agreements (NDA) wherein the supplier actually feels part of your business strategy and will go the extra mile to resolve challenges, allocate resource when required and believe that they are an important stakeholder and will certainly benefit in the ongoing success of the business. I have achieved this collaborative structure through personal engagement; regular visits to understand the big challenge of the day and reviewing progress against previously agreed actions. I believe in the personal face-to-face engagement to solidify that mutual trust and respect that stands up when issues arise and are often seamless elements of resolving issues on an ongoing basis.

Some examples would include situations where common parts on allocation, perhaps power amplifiers used in RF solutions, were received despite the fact that I was not the highest consumer of the part, even that I was not paying the highest price, but more driven off the fact that future product would be sourced from the supplier who works in a collaborative fashion for mutual benefit. On another occasion I was able to secure continuity of supply and cost despite the fact that a relatively unknown player had acquired the business with projected significant decline in volumes. The supplier in question knew that I would be open and transparent to share demand fluctuation and would fully support collective issues especially where excess inventory was their key concern.

There is always a creative solution to any issue; the resolution is often discovered by a willingness to encourage others to explore solutions that may not be normal or common-place and free themselves from preconceptions of how such issues have usually been managed – intolerance to find creative solutions can fundamentally break collaborative relationships.