Managing a supply chain can be difficult for even the most organized team. Depending on the number of vendors and suppliers involved, ensuring that these entities fulfill the terms of their supplier agreements requires constant monitoring and effective communication.
When working with vendors and suppliers, let them know what you expect from the relationship. Tools that help define what you expect from vendors and suppliers include supplier agreements and vendor/supplier performance assessments.
Supplier Agreements
A supplier agreement typically includes a set price for materials, delivery times and inventory maintenance, along with promises of product quality (including adherence to federal and local rules and regulations).
Within a supplier agreement, clearly define what you need/expect from vendors and suppliers so they can provide the best goods and services.
Before signing the agreement, meet with the vendor/supplier to ask/answer any questions both parties may have.
Vendor/Supplier Performance Assessments
Periodic assessments of vendors and suppliers can help you determine if these entities are meeting the terms of their supplier agreements.
Review delivery times, test product quality and research market prices to make sure vendors and suppliers maintain fair pricing.
Contact vendors and suppliers to discuss any issues that arise as soon as possible so they can provide suitable solutions. Failing to address product or delivery issues could result in lost profits, factory downtimes or employee injury for your business.
Most vendors and suppliers want to create and maintain long-term business relationships. By alerting vendors about supply issues or concerns, you’re providing open, honest communication that benefits everyone within the supply chain.
Supplier Information Management
Communicating with those in your supply chain requires intimate knowledge of the factors that affect the chain’s ability to adequately support your business.
Unfortunately, bad weather, industrial accidents, supply chain materials and labor shortages, equipment malfunctions or transportation issues can prevent vendors and suppliers from meeting all the requirements stated in supplier agreements.
In addition, if your business has decided to upgrade its facility or put various sustainability practices into place, vendors and suppliers need to know this information so they can adhere to updated product quality standards, increased product needs, etc.
By providing ways for those in your supply chain to communicate quickly and openly with you and each other, you can minimize the effects of these issues. Build an online portal where vendors and suppliers can report issues or designate an email address so they send supply chain alerts/reminders/etc.
Make sure everyone in the chain understands the situation so they can adjust supply and delivery times. In some cases, vendors may be able to assist each other, which can help solve supply issues.
The sooner you and those in your supply chain know and understand supply chain issues, the sooner all of you can put backup plans in place so your business (and their businesses) continue to operate.
Tips for Successful Supply Chain Lifecycle Management
Ideally, you should build long-term business relationships with vendors and suppliers that last for years and years. Interruptions to the chain, such as finding a new vendor for a particular part or material, can negatively affect your bottom line.
Maintain a respectful, professional tone, especially when confronting vendors/suppliers about product quality or delivery issues. Make sure the vendor feels valued and appreciated when addressing these issues.
Keep vendors/suppliers informed of inventory issues, order placement issues and requests for more goods and services so they can provide additional resources not included in supplier agreements. For example, if your business experiences unexpected or rapid growth, you may need additional materials to fulfill customer orders. Contacting vendors and suppliers as soon as possible allows them to produce and deliver these items without causing production issues on their end.
Share projected growth research and analysis with suppliers when renewing supplier agreements so everyone understands the need to readjust product quantities and delivery times.
