Downstream Supplier Performance Management

As per a recent Industry Week article, collaboration in the 21st century must be a tightly coupled relationship, not only between retailer and manufacturer, but also between manufacturers and all downstream suppliers and stake holders; including logistics, raw material, sub-contractors, packaging and quality / validation services, and, yes, even legal and finance. Otherwise, the chances of the right product hitting the right place at the right time are not very good, and neither are the chances of the final costs being on target. To this end, if you are to manage downstream supplier performance effectively, you need to be aware of the issues and trends. According to the author of the Industry Week article, Phil Friedman of QAD, there are four key issues and trends that consumer product manufacturers and retailers need to be aware of if they are to effectively manage downstream supplier relationships. They are:

  • Your raw material suppliers need visibility into your current demand plan.
    A root cause of missed delivery dates is a raw material supplier’s lack of visibility into a manufacturer’s current demand plan, which is often a constantly changing target in a demand-driven supply network. If a raw-material supplier believes a slowdown is coming, when in fact an upswing is just starting, delivery dates will likely be missed. Similarly, packaging suppliers need to align production, delivery, and, sometimes, design and art to support a manufacturer with tight schedules.
  • You need in-transit visibility since being in transit doesn’t guarantee you’ll get your shipment on time.
    You need to be aware of where the item is and whether there are any variances with respect to the original schedule. Otherwise, you won’t know that an item is going to be late until its late. However, if you know that your shipment sat on the dock three days longer than expected, and that it is going to be three days late, two weeks before the expected delivery date, you can adjust production schedules accordingly.
  • You need to know that supplier material meets quality standards before it is incorporated into your product.
    As recent years have demonstrated, poor quality materials can lead to massive recalls and significant hits to your brand and your bank account. Your suppliers should be able to prove to you that their materials meet specifications before they ship them to you, possibly through independent third party testing and validation.
  • You need to get all of your regulatory and business requirement ducks in a row well before you need the first shipment.
    As the article points out, orders are often missed not because the product is not ready, but because letters of credit are in error, quality assurance liability bonds have not been signed off by legal, and one delay after another causes raw material or contract manufactured products to sit and wait.

So if you make sure you are working in concert with your suppliers, distributors, partners, and internal counterparts, you can be sure that you’ll be a lot less likely to miss your delivery dates.