Supplier Hit Parade, Part 2

In the first part of this blog, I emphasized why it is important for component suppliers and contractors to take their cue from customers if they wish to establish a long-term relationship with one another. After more than two decades in the high-tech sector as a component engineer (during which I doubled as the buyer for many employers), I have identified many characteristics most purchasing professionals want to see in representatives they deal with at suppliers.

The list is not exhaustive, but if you want to make a big splash with a buyer at an OEM or contract manufacturer, I suggest you pay close attention to the following criteria, which I use in determining what I call the supplier hit parade.

  1. Integrity:
  2. The company does whatever it says it is going to do. Promises do not stock shelves.

  3. Follow-through:
  4. The fewer calls I have to make to get products delivered, the happier I am. If a supplier says I will be called back with a stock status by 3:00 p.m., and I have to call the supplier after 3:00 p.m. to remind it about that promise, that would be a major strike against it. I always said that, if you are not going to give me a call by the stated time, please let me know, so I can adjust my expectations. If I get such a call, I am satisfied.

  5. Respect:
  6. This is not so much respect for me as an individual, but respect for my time. If a supplier drops in for an unannounced visit, I probably have barely enough time to say hello and goodbye. If I inform the supplier that I have only 10 minutes, and it chooses that time to begin a long presentation, I would have to cut the supplier off mid-presentation and say that it would have been better to make an appointment. I would walk away from that experience not looking forward to hosting that supplier again.

  7. Knowledge:
  8. No salespeople should sell any product that they don't understand enough to answer basic enquiries about it. Some components are very complicated, and most salespeople will not be able to answer technical questions if they are not application engineers. That is understandable. But if I ask general questions like “Do you carry RJ45s with magnetics integrated into the housing?” and hear answers like “I don't know. Let me check the catalog,” I immediately know that this person will never really be able to help me perform my job. Salespeople should know their catalogs forward and backward.

  9. On-time deliveries:
  10. The MRP system includes in its forecast the lead times for individual parts and assemblies. In reality, these are moving numbers. If I place an order and a supplier says it can ship in two weeks, I expect to have the product in receiving in about two weeks, allowing for transportation time. If I have no product and no tracking number in two weeks and I have to call the supplier to expedite the order, I am not happy.

    If at that time, the supplier tells me it will be another two weeks, I am upset. To meet my build schedule, I will likely have to go into firefighting mode and find another supplier. Spending time doing that means something else on my priority list is not getting done. That is two strikes against that supplier. It didn't make the shipment, and it didn't call to let me know it was not going to make the shipment.

  11. Accuracy:
  12. If I get something other than what I ordered, I cannot build squat. I begin to think that the quality assurance program at the supplier is sadly lacking in the basic functions required for order fulfillment checking. This is a big strike if it happens once and a huge strike if it happens again. I cannot trust this supplier's internal processes, so I am going to slip it into the last position on my supplier list.

  13. Price/cost:
  14. You knew that was coming. With all other things being equal, and considering the competitive nature of suppliers, cost can be a deciding factor, even if the first six items on this list are in good shape. Over time, all my qualified suppliers may have demonstrated an adequate level of competency and performance. In that case, cost and availability become the final differentiators. An exception would be, for example, if I am selling a microwave communications link at $50,000. If a particular capacitor costs six cents at one supplier and seven cents at another, the cost of the part is not going to be a deciding factor.

  15. Coverage:
  16. By this, I mean how many parts on my bill of materials (BOM) I can purchase from any one supplier. Vendor A has comprehensive coverage, but if I make this my only consideration, I am going to pay much more for my materials than if I purchased only my passives from vendor B. Still, the fewer reliable suppliers I need to complete a BOM purchase, the fewer phone calls I have to make, and the fewer vendors I need to track or expedite my purchased items. Additionally, the more volume I can order against a single purchase, the better my pricing will be.

Take these items, create your own scorecard, and let your supplier know it is being rated using a formal process within your company. It never hurts to send the results of your scorecard to your supplier contacts, so they have a consolidated feedback mechanism that informs them where their company stands within a very competitive environment.

If they get all an A for performance, they will know they are meeting their own company's goals as best as they can. If they get a D, they should not expect a lot of business from your company. Either way, you are showing that your company is watching and rating its suppliers, and that your business is setting a high standard for their performance.

10 comments on “Supplier Hit Parade, Part 2

  1. Barbara Jorgensen
    July 16, 2012

    Hi Douglas: Although you specify “individuals” in this post, I am wondering how you feel about automation. Unless I have a question or problem, I often find it faster to do something online. In fact, the last time I had to deal with a person (I had to call our very large bank for a credit card question) they plagued me incessantly for a week (phone and e-mail) for feedback on my “service experience.” I told them if they didn't stop bugging me it would be my last service experience…

  2. dalexander
    July 16, 2012

    @Barbara, This week I placed a number of orders for a client. After finding an alternate part, I had to confirm that I could get samples so I needed to talk to a real person who could call their factory in Hong Kong to arrange for an expedited shipment. I also called back to make sure my request had been honored. Again I talked to a person who sent me a confirming email after hearing back from their contact person in Hong Kong. I am building a PCB on the 20th. I could not leave anything to chance. With another distributor, I had to order cut tape quantities of 0402 parts and needed to meet a 6″ tape length minimum for a prototype build assembly house requirement to avoid hand soldering as a second operation. I bought the number of components based upon the feedback a tech gave me after verifying the component count per inch on the tape. I said all of this to point out that automation can take you down the standard paths or line of questions, but real people are key to gaining 100% confidence that a unique requirement is going to be met. I appreciate and use online ordering through most distribution, but on a BOM of 100 parts, some percentage of them are going to require extra attention, including custom frequency programmable oscillators, first make last break connector pin length adjustments for power and ground connection sequencing, etc. I also believe there is no better method for expediting than a human being tracking and talking to another human being guaranteeing stock availabilty, emegency part replacements, or that a package actually went out the door and did not just receive a shipping number waiting on the shipping dock for a truck to arrive. I can believe a computer because even if their information is wrong, they cannot lie….I cannot completely rely on one because they can't check the quality of their data. Too many times I have heard the excuse,,,”our computer said we had it, but there were none in the stock bins.” Give me a human being with two legs, or a phone to talk to someone with two legs that has access to the physical stock, and I will feel much better about the real time stock status if I absolutely, gotta have the part the next day or that same day.

  3. bolaji ojo
    July 16, 2012

    Douglas, I doubt anyone can say your position is wrong but there is a flip side to having a human touch in the purchasing channel. A lot of people will contend the cost of having a human at the other end of the phone can be quite high and that purchasers aren't really ready to pay the extra cost. Would you pay a distributor for the extra service you get from a human versus a machine?

  4. Barbara Jorgensen
    July 17, 2012

    Hi Douglas: You make a compelling case for humans 🙂 You are correct in that machines do lack a key component: judgment. I've had mixed results with that: in some cases, folks have used their judgment to solve a problem that a machine could not. In others, I may have well be talking to a machine because I kept getting the party line: “We cannot accept…” You are also correct tht in a service envionment, the things you expect of a supplier are 100 percent reasonable. And going beyond “reasonable” is even better. I've had a few of those experiences too.

  5. dalexander
    July 17, 2012

    @Barbara, Another thing comes to mind that helps make our companies more competitive. This is where a good buyer can shine. That is the process of negotiations. One just cannot negotiate with a computer. The cost is fixed to quantity, and if I need to get a low enough price that will also allow me to pay for my Mother's operation who by the way hasn't eaten in 20 days because if I buy these parts at the full price, I won't be able to buy her any food this week either. A computer response would be “irrelevant…irrelevant…irrelevant…the price is fixed…you must pay the price indicated in column C or we cannot complete this transaction.” Whereas a human response would be a simple “BS”. Now which would you rather hear. I'll take a sincere BS from a human any day over a computer's BS (Binary Solution).

  6. dalexander
    July 17, 2012

    Bolaji, I know the technology trend is towards automation for repetitive processes. But, the word “company” means “with bread” in Latin and it implies sitting down and sharing a meal. I would much rather share bites rather than bytes. I hope we never lose the personal touch. We need it as human beings, as social beings, and as long as there are opportunities to interact at the personal mixed in with the professional level, then our jobs can be a source of enjoyment beyond just satisfaction for efficient results. Would I pay extra? No. Should a company identify all the non- repetitive processes and staff up with human beings accordingly? Yes. If not, the more automated the responses become, the less options we have as initiators of actions or the more automated we are forced to be ourselves. Consequently, the more replaceable we are and the less we are valued as human beings. I say this emphatically, “I am not a drone…I am not a drone…I am not a drone…”

  7. bolaji ojo
    July 17, 2012

    Here's my counterpoint to your advocating the human “bite” versus the machine “byte.” Humans are as error prone as a machine can be insensitive. The example you gave of a human being more likely to offer certain pricing concessions because he or she listened to your story gave me heart pangs! If you get the price break because of your “story” and I don't get it because I didn't have a “story” it could tick me off royally against that supplier.

    Machine may be prone to deciding things on the basis of how it is programmed but humans can use “programming” that you aren't aware of to be irrational in their decisions. I think we have to find a neutral way of dealing with issues like this. In business, the human touch can be critical but I've done business on the basis of my deep understanding of a human's “story” before and got burned in the process.

  8. bolaji ojo
    July 17, 2012

    You wouldn't pay more for the “extra value” I offer by making sure there's a human at the other end of the phone? That's one of the reasons companies are removing the humans you so much need at the other end. In the late 1990s, distributors were asking OEM and contract manufacturer customers to pay for the extra services they enjoyed. They balked. So, distributors — for whom this was a cost — began withdrawing the services. If you get value for service, be ready to pony up.

    I admit that being human makes us different but I'll be blunt. I work for personal fulfillment, including wages. What I really like to do is quite different from what I do professionally. I bet you can identify with that too, which tells me perhaps it isn't too much to expect payment for services provided. If a machine provides good service, I'll shake its hands!

  9. Barbara Jorgensen
    July 17, 2012

    Bolaji and Douglas: I do get the impression that in electronics, the trend is swinging back toward the human factor. To use Bolaji's distribution example, distis pulled people out of local offices into hubs in the 1980s-1990s to save on expenses and redundancies. Now, distirbutors are selectively adding local offices and people once again. (Also proximity warehousing.) One factor is technology is more complicated and buyers need more help. Even in catalogs, where prices are fixed and buying processes are easily automated, companies are opting for local human interface. There is really no all-or-nothing scenario anymore.

  10. dalexander
    July 17, 2012

    @Barbara, Bolaji and Douglas: I do get the impression that in electronics, the trend is swinging back toward the human factor I sure hope so. A computer is based on logic and not reason. Sometimes I just need a reasoned response. I can take no as an answer if I think my requests have been even considered. T/F and Y/N answers just don't cover all the “for instances” and exceptions that take place in a normal conversation.

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