Suppliers - friends or foes?

What do we buy in?

Which supplies are mission critical?

Who are our key suppliers?

Do we treat them well?

Not all organisations create products - but all have suppliers, even if just for stationary. Many organisations can be completely crippled if they run out of, for example, printing materials.

Even for the smallest company it can be worth running a check on which supplies are operationally critical and which are not.

One way that suppliers can be assessed is by evaluating them against the 10 Cs. The 10 Cs was a concept first outlined in 1995 by Ray Carter of DPSS Consultants based in Sidcup Kent. He later added a further three Cs. The full 10 Cs are as follows:

1. Competency - How competent are they?
2. Capacity - Do they have the capacity to cope with your needs?
3. Commitment - How committed are they to standards and most importantly, how committed are they to you?
4. Control - Do they have control of their situation, including their supply chain?
5. Cash - Are they solvent and likely to stay that way. Do they have enough cash to operate?
6. Cost - How do their prices compare to other suppliers?
7. Consistency - Is their quality consistent and measurable?
8. Culture - Does their culture compare favourably with yours and your expectations?
9. Clean - Do they have a sustainability policy and is it local and follow best practice guidelines?
10. Communication - Are the lines of communications clear between you and them?

A useful way of assessing and comparing the risks and importance is by running what is known as a Paired Comparison Analysis (also known as Pairwise Comparison). This can help you work out the relative importance of a series of items and thus where the potential risks lie.

Once a feel for where the importance and risks lie it is then possible to run a comparison of suppliers to assess which offers the best value-for-money. Using a 0 -10 scale (0 = bad, 10 = good) rank each supplier for each of the 10 Cs (or any other factor you might want to use). For each ranking multiply your 0-10 evaluation by the "weight" obtained by Paired Comparison or some other method.

There are many more ways of assessing your supply chain, for example, you could use a software tool such as 1000 Minds or by using a tool such as the Krajic Portfolio Purchasing Model .

The single most important factor can be summed up as "alignment". How closely do your suppliers operations match yours? Can they ramp up to meet your demand and ramp down without significantly increasing unit price?

At the most basic level, assess the quality of bought-in products. Establish a measurable and recordable way of assessing quality including price and delivery time. Regularly review how your suppliers are doing, comparing where possible.

Even if you are thoroughly happy with your suppliers, do you have contingency plans in case some disaster befalls their operations? Remember - stuff happens! A regular credit check on your suppliers can be quite revealing and might highlight issues which are not obvious on the surface.

It might sound obvious, but a simple list of suppliers and the contact name can also be very useful, especially if the usual buyer is unavailable and someone else is standing in. Run through every single expense and check that all the suppliers are listed. This applies to suppliers who you no longer want to use; make a note why they should not be used for future buyers information.

If you have an accounts department or even if you don't but are running an accounts package, check that all suppliers are listed and purchases are not listed under Supplier = "Miscellaneous".

There is another, very important side to this. What do your suppliers think of you as a customer?

Contact William at Premier Crew now to see how you can improve and secure your supply chain and supplier relationship.