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Help your suppliers help youSample TextSample TextWhether in Baltimore or Beijing, even the best suppliers can have problems. Read how three leading-edge companies help them find solutions.
By David Hannon
Purchasing May 4, 2006
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There are two megatrends taking place dramatically impacting the way a typical sourcing organization assesses suppliers: global/low-cost country sourcing and a rash of financial problems among suppliers of all sizes and tiers. Both trends emphasize that strategic sourcing organizations need to track suppliers more closely today—whether they are down the street or across the globe. Setting and acting on detailed metrics will produce both strong suppliers and cost savings.
Michael Higgs, senior commodity manager at airflow and automation systems developer Synetics Solutions in Portland, Ore., says dealing with overseas suppliers sometimes means adjusting metrics and digging a bit deeper into the reasons behind missed metrics.
"For performance tracking purposes, I'll often ask why the supplier can't build or ship products to us in the time expected," Higgs says. "If we can remove a roadblock for them and correct it so they meet their metrics, it's better for us both."
Higgs says he learned the lesson in working with a Japanese supplier several years ago. An on-time delivery metric was set based on the supplier's production capabilities and typical shipment time from Japan to the U.S. But what was not considered was the actual location of the supplier in Japan. So instead of assuming the supplier could not meet the company's needs, Higgs did a deeper dive to find out more.
"The supplier was located in a little town four hours from a major city," he says. "So they shipped to that city, where supplies sat a day before being shipped to a bigger city and then exported. As a result, their on-time delivery was down to like 20%, but when we adjusted the metric to take that into account, their on-time performance was consistently 90%."
Like most manufacturers, Synetics is making an effort to better understand the financial state of its suppliers both domestic and overseas. Step one, says Higgs, is making sure bankruptcy is not a possibility. Step two is determining how much of the suppliers business is with Synetics (too much or too little is not good). Step three is closely evaluating the way they quote business or handle requests—honestly and fairly.
"Sometimes suppliers accidentally miss a number in their quotes or accidentally bid too low—we point it out to them and make sure they're aware of it. It fosters a good relationship and builds trust," he says.
Higgs talks with his top five suppliers weekly to discuss any issues or missed metrics that week and any expected problems in the coming week. And by working to resolve any issues early on, Synetics is able to identify suppliers that are best suited to become more active partners based on their metrics and more importantly, their actions after metrics are identified.
For example, a sheet metal fabricator that supplies Synetics has been doing an outstanding job recently including communicating with Higgs on any issues ahead of time. As a result, Synetics is working with this supplier to supply assemblies in addition to fabricated sheet metal.
"We actually created a class with our in-house lean expert for our top suppliers," he says. "We had the suppliers take the class and share lessons learned with each other. Then we solicit feedback about the class—we want to know what each supplier took away from that class to help them grow and provide us with better products and systems."
The news of some major tier one automotive suppliers having financial problems impacts suppliers of all sizes, Higgs says. He tries to use those instances to show his suppliers how some financial problems can be avoided by working more closely together.
"It's in my best interest to make sure our suppliers are financially stable and viable for the long term. It costs a lot of money to bring a new supplier up to speed, especially in the low-cost regions."
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Teamwork
Medical device maker Boston Scientific in Natick, Mass. recently created an internal organization committed to tracking, and improving the performance of its global supply base. The fully staffed and dedicated Global Sourcing Analytics Team provides focus and depth to its supplier performance initiatives for both domestic and overseas suppliers.
"This team is responsible for generating and analyzing key metrics for the major commodity areas supported by the Global Sourcing organization," says Karen Weinstein-Millson, vice president of global sourcing at Boston Scientific. While the team works on both direct and indirect spend categories, the majority of its supplier performance tracking is on the direct materials side.
"Supplier performance reviews are created for key strategic suppliers," says Weinstein-Millson, adding that strategic suppliers are those that supply multiple plants. "In some cases strategic suppliers service both our plants in the U.S. and in Ireland. Thus, when that supplier's performance is reviewed we have truly global participation. We have had as many as 10 plants around the world participate in one supplier performance review."
Metrics used to evaluate suppliers include comprehensive spend analysis, leadtime reporting, capacity utilization, and risk assessment. In addition, the team also generates executive level panel metrics that include resource management and continuous improvement activities, providing a closed loop information flow on the impact of supplier performance on internal manufacturing operations and customer satisfaction.
The Global Sourcing Analytics team also conducts standardized (nonstrategic) supplier performance reviews to analyze and benchmark supplier performance. "We keep all reviews as standardized as possible, so there are only minor differences based on where the supplier is located," says Weinstein-Millson.
Using a balanced scorecard approach, measurements include spend trends, year-to-date savings, quality performance, delivery performance, inventory programs and service and responsiveness.
But metrics mean nothing without action. Some of the key improvements Boston Scientific's Global Sourcing Analytics team has undertaken based on its detailed supplier tracking include:
Streamlining existing supplier review and benchmarking reports using a lean approach, enriching presentation quality while reducing analyst work time by more than 20%, allowing for each analyst to directly support strategic commodity-driven activities. This approach has shifted strategic work time for the analyst team from 17% to 30% in one year.
Implemented supplier "360" surveys and analysis of all strategic suppliers, encouraging direct feedback to purchasing on areas for improvement. Each plant procurement and materials manager ties individual performance objectives to this analysis, deepening long-term relationships with the supply base.
Implementation of a solution to automate all spend data classification with an external supplier, which will improve efficiency by one FTE and allow for the analytical team to work more closely with strategic sourcing managers to discover new savings opportunities, yielding expected savings of more than $1 million.
Development of a corporate leadtime report, with supporting analytical resources responsible for identifying and driving opportunities for leadtime improvement across the company's plants, resulting in a reduction from 27.5 to 25.4 days for sourcing leadtime (8%), with dramatic improvements expected by midyear 2006.
Selecting players
What makes a good candidate for the Global Sourcing Analytics team? Weinstein-Millson says there are two skill sets required first and foremost in any supplier-facing position. First, the team member must be able to analyze complex supply chain and/or sourcing business problems with a high degree of efficiency.
"In other words, he or she must be able to organize and analyze data into metrics, reports, and presentations such that it drives value in the supplier relationship," she says.
Secondly, the analyst must have excellent communication skills and other soft skills to support the strategic sourcing goals globally.
"The analyst must be able to understand the big picture of the supplier relationship and learn from the strategic sourcing managers how to effectively communicate with suppliers, as well as negotiate and navigate complex situations and business problems. Developing this skill set is more difficult, and comes through a combination of training, coaching and experience."
Get out your scorecards
Edmund Optics in Barrington, N.J. has been supplying optical components for more than 60 years, so it knows a thing or two about how a supplier should work. Today, the company is sourcing up to 30% of its spend overseas and it was that trend that drove the company's purchasing organization to take a close look at what it considers on-time deliveries from suppliers, both domestically and abroad.
James A. Feizet, purchasing manager, says last year the company took a new approach to calculating on-time delivery. Domestic suppliers are considered late on any shipment that is three days past due and overseas suppliers are given a five-day grace period. Prior to this move, there were no formal processes for tracking supplier delivery times—only word of mouth information sharing.
"Special consideration is given to international shipments because we receive both overseas air and sea shipments, and there is potential for delivery problems which would include paperwork errors, customs clearance delays, weather problems, etc. that cannot be strictly attributed to the supplier. Is the two extra days justified? Yes in my opinion."
In fact, most of the overseas shipments come from Edmund manufacturing affiliates that recommend shipment methods based on need. The company hopes to automate the supplier quality scorecard within the next year.
Quarterly delivery performance report cards are sent to the most critical suppliers. For those suppliers not performing satisfactorily, supplier corrective action forms (SCARs) are sent asking the supplier to address and provide corrective measures to resolve their delivery problems.
Twice a year, purchasing at Edmund reviews leadtimes with its most critical suppliers to address any issues. The result has been a 20% improvement in on-time delivery with the trend continuing upward.
"Most suppliers have tremendous pride in their performance and by documenting it and discussing it with them, improvement will occur," Feizet says.
[ 本帖最后由 zeke 于 2006-6-2 18:36 编辑 ]
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字体有点小
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It seems useful for interview.hehe.
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顶！！！！！！！！！TKS
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thanks a lot
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