Smaller companies need world-class suppliers just as much as larger entities. Unfortunately, supplier development can be a lot more challenging for smaller companies. There are various reasons for this. However, in many cases, small companies struggle, especially with developing lean six sigma strategies that can make all the difference.
There are many very good reasons why small companies struggle to create a chain of world-class suppliers.
Small entities can develop world-class suppliers. First, you need to have a plan, and it needs to be in writing and worked on with input from everyone, including your suppliers.
Planning also allows you to involve supply chain people during the development cycle. Engineers can then work with you to select the best products. As a result, the tendency for each product cycle to choose different suppliers is reduced and, ideally, eliminated. At the same time, you must ensure you have enough backup supply options to maintain continuity and competitive pricing.
Use the 80/20 rule to focus competitive bidding where it makes the most difference: total cost of ownership performance. This takes into account all the costs of doing business with a supplier, including things like lead time and inventory. Too many small companies consider only the piece price and shipping costs, not the costs of, for example, a defective part resulting in a product recall. Make sure that you look into anything that will speed up inventory turnover.
Involve the financial people and ensure they inform you of payment term norms. This ensures that you are not tricked into nonstandard (and often substandard) contracts.
Remember that with LSS you are not in an adversarial relationship with your supplier. Instead, your relationship is a complementary one. Your suppliers are your partners and have a stake in your success. This is perhaps the most important thing to remember. An adversarial relationship that cannot be resolved may mean it is time to cut a supplier loose.
Is your small firm struggling to get world-class suppliers? MetaOps can help! Contact us to find out how we can help you get it done and work on supplier development that will lead you to success.
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