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Logistics Supplier Management – A Holistic Approach 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 GuideThere 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 SystemThis 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 ProcessHowever 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 SuppliersNo 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.
Sirius Logistics worked with a component manufacturer, which had undergone significant and rapid growth to establish logistics practises within its organisation. The objective for the company was to avoid imposed change by developing the knowledge and understanding of its team so they determined the best way forward. Sirius Logistics facilitated this by working alongside team members to give them the focus and technical back up needed to identify areas for improvement and provide solutions. Their key measure of customer satisfaction is ‘On Time Delivery’. This was already measured externally, but the team wanted to measure it from within to assess the capability of their processes. Sirius Logistics designed and delivered the measure. The company has high calibre staff, who are very committed to its success. As the company has grown, so these personnel have taken on more responsibility. The magnitude of the tasks they now undertake needed to be controlled through process, giving them the time and space to manage exceptions, rather than the norm. We analysed the business processes and highlighted areas that could be systemised. Together with the team we developed specifications to deliver this change. They re-engineered their current processes to link customer orders to manufacturing to final delivery of order, giving supply chain visibility. The areas that they focussed on to improve performance were Stock Control and Component Tracking; Sales and Operation Planning processes; Material Requirements Planning for all parts; Bill of Material structure and Exception Reporting. Sirius Logistics became part of the team acting as coach and mentor and created the solutions together with the client. The key to successful implementation is ownership, and this team designed and implemented their own business process improvements. We have given them the knowledge and shared our experiences so that they have sustainable improvements and a vision of the future.
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