It is common to find in a buyer-supplier relationship, the suppliers often see the buyers as someone trying to squeeze their profit margins; Whereas the buyers often felt that the suppliers promise more than they deliver, and try to earn more by using cheaper materials. The prerequisite of improving supply chain performance starts from a collaborative buyer-supplier relationship. While preparing for our upcoming webinar, our CTO Thomas Cheah sat down with Edward Rayner, Procurement Consultant at Spotless Group in Australia, and Colin McIntyre, Director of Lean Procurement in the United Kingdom. Both of them have their wealth of experience in understanding the behavior of buyers and suppliers, and the approach to build trust between them for improving supply chain performance.
GoSourcing: To a lot of companies, supplier performance is just about on-time delivery. What's wrong with this? What are they missing out?
Edward Rayner: As a buyer, by focussing merely on on-time delivery, you are ignoring the performance of the supplier's goods/services along the journey through your organisation to your customer. This reduces opportunities for innovation to improve customer experience as well as risk prediction and mitigation.
GoSourcing: What should be the standard performance metrics of a supplier company?
Colin McIntyre: Aside from on-time delivery, suppliers need to have qualitative measurables in place such as efficiency of quality systems, relationships and communication to show an early warning which could prevent late delivered.
Edward Rayner: As a buyer, by focussing merely on on-time delivery, you are ignoring the performance of the supplier's goods/services along the journey through your organisation to your customer. This reduces opportunities for innovation to improve customer experience as well as risk prediction and mitigation.
GoSourcing: What should be the standard performance metrics of a supplier company?
Colin McIntyre: Aside from on-time delivery, suppliers need to have qualitative measurables in place such as efficiency of quality systems, relationships and communication to show an early warning which could prevent late delivered.
 | “As a buyer, by focussing merely on on-time delivery, you are ignoring the performance of the supplier's goods/services along the journey through your organisation to your customer. This reduces opportunities for innovation to improve customer experience as well as risk prediction and mitigation.” |
GoSourcing: Some said that suppliers improvement program should be two-way, with both parties learning from each other. We often hear from suppliers about the lack of feedback and communication. What actions can the suppliers take to improve the situation?
Colin McIntyre: Many suppliers only hear from the buyers when things go wrong. A lot of times buyers will not allocate their time to suppliers when things are going smoothly. Agencies can be used such as FPAL that provides a formal feedback system. ISO9001 implementation also has customer and supplier feedback as part of the accreditation.
GoSourcing: The relationship between buyers and suppliers turns south when one of the parties decides to take advantage of the other. From the buyers’ perspective, what are the worst suppliers' behaviors that will damage the trust and relationships?
Edward Rayner: The number one trust destroyer is not alerting buyers to potential problems ahead of time. Some suppliers will even try to cover up when problems arise. If the buyers learn about the issues, the suppliers' credibility drops to zero.
Colin McIntyre: Many suppliers only hear from the buyers when things go wrong. A lot of times buyers will not allocate their time to suppliers when things are going smoothly. Agencies can be used such as FPAL that provides a formal feedback system. ISO9001 implementation also has customer and supplier feedback as part of the accreditation.
GoSourcing: The relationship between buyers and suppliers turns south when one of the parties decides to take advantage of the other. From the buyers’ perspective, what are the worst suppliers' behaviors that will damage the trust and relationships?
Edward Rayner: The number one trust destroyer is not alerting buyers to potential problems ahead of time. Some suppliers will even try to cover up when problems arise. If the buyers learn about the issues, the suppliers' credibility drops to zero.
 | “Many suppliers only hear from the buyers when things go wrong. A lot of times buyers will not allocate their time to suppliers when things are going smoothly. Agencies can be used such as FPAL that provides a formal feedback system. ISO9001 implementation also has customer and supplier feedback as part of the accreditation.” |
GoSourcing: What about on the suppliers' end? What are the things buyers do that could damage the relationship?
Colin McIntyre: By far the worst behaviour is telling the supplier one thing and then doing another, either by accident or intentionally, such as the buyer fabricating ongoing demand higher to obtain discounts or promising payment of an invoice on a particular date.
GoSourcing: What are the best practices of effective supplier performance management program to reduce business risks and revenue losses associated to suppliers?
Edward Rayner: Run scenario testing of Supplier Failure, i.e. "What happens if Supplier X becomes insolvent tomorrow." Ask yourself questions such as: How long till our ability to serve customers is effected? Where are alternative supplies available for each component of supply? How long will it take to mobilise these alternative supplies?
Colin McIntyre: By far the worst behaviour is telling the supplier one thing and then doing another, either by accident or intentionally, such as the buyer fabricating ongoing demand higher to obtain discounts or promising payment of an invoice on a particular date.
GoSourcing: What are the best practices of effective supplier performance management program to reduce business risks and revenue losses associated to suppliers?
Edward Rayner: Run scenario testing of Supplier Failure, i.e. "What happens if Supplier X becomes insolvent tomorrow." Ask yourself questions such as: How long till our ability to serve customers is effected? Where are alternative supplies available for each component of supply? How long will it take to mobilise these alternative supplies?
See Them Live on Thursday
Edward and Colin will be live in our upcoming webinar. Click on the banner below for more details and registration.
