Sirius Logistics Limited - Logistics Supplier Management

The best supply chains enrol all interested parties giving rise to collaborative approaches. Manufacturers at the head of the supply chain can influence their customer service by considering what is happening further along it. This paper examines the way in which suppliers should be involved.

The theory is that to have a lean and responsive supply chain you must understand and involve all key elements. Suppliers are no exception. They need to have processes that support the needs of you the customer. That may be as simple as sending in the parts you schedule when you want them, or having an understood level of flexibility to be able to respond to the changes you experience from your customers – allowing you to be agile to customer needs.

The building blocks that make up a holistic strategy for managing suppliers are Supplier Requirements Guide, Supplier Information System, Supplier Communication and a Supplier Improvement Process.

Supplier Requirements Guide

There are two elements to defining what is needed from a supplier. Firstly the overall requirements, such as labelling, or transport arrangements. These are intended to provide a platform from which you, the customer, can run efficient processes. They should conform to industry standards as much as possible and be simple. If they become complex suppliers will not comply consistently and opportunity for error and difficulties in your own processes become inevitable.

The second element is supplier specific requirements. For example a supplier who sequences parts, or is operating a Kanban, will have individual instructions to follow. Similarly different products raise different logistics needs. For example a supplier of a complex part will need defined and agreed flexibility so that your programming can work effectively. Likewise, perhaps a product has special handling instructions and so on.

Supplier Information System

This is a mechanism to gather data about a supplier. Some of it will be fixed information, such as contacts and locations. This can be gathered through a questionnaire and made available for all customer contacts. In addition to fixed information it is also important to assess suppliers performance. This will include objective and subjective measures. Popular indicators are delivery performance, schedule adherence and delivery quality. Subjective measures are usually defined specifically to suit each industry, and reflect the supplier’s response to the pressures of their customers.

Supplier Communication

‘It’s good to talk’! Communication is vital to engendering good customer-supplier relationships. In addition to the daily conversation, suppliers need to keep up to date with customer changes and enhancements. That may be product introductions and the demands they put on the supply chain, or process changes, such as introduction of Kanban, or lean manufacturing and it’s implication to the supply base.

Supplier Improvement Process

However good we all are it is always possible to get better. Improvement techniques should work at two levels.

Firstly to give all suppliers a taste of what is expected of them. A manufacturer can use communication to preach the gospel on 6 Sigma, or a regular newsletter. Anything that directs improvement without hands on management.

The second area is dealing with suppliers who are failing. The processes employed need to focus on finding the root cause of supplier’s failure and putting short term fixes in place to stop further failure, while developing longer terms plans to permanently improve supply performance.

Performing Suppliers

No one is in business to intentionally do a bad job. Customers and suppliers have it in their own hands to both seek the information that will make them successful and provide the framework for a good collaborative working relationship. It’s strange to relate that the best suppliers are the ones you talk to least. They can provide inspiration for dealing with those that require a more hand on approach and will appreciate being managed proactively.

Logistics Supplier Management provides the methodologies to deal with all circumstances in the supply chain and can be applied to all types of supplier. It is an essential tool in any supply chain manager’s kit bag.