To stay ahead of a competitive, global market, it’s essential that you source high quality spare parts and materials with reliable delivery times, all while being conscientious of costs that can mount from excess purchases.
Unsurprisingly, the first step in doing this is finding the right vendors for your operations and procurement teams to rely upon. But, how do you choose the right vendors for your manufacturing enterprise?
In this article, let’s look at a few ways where you can transform potential suppliers into trusted vendors and foster strong, long-term relationships with them.
Finding suppliers you can trust
Expand your network
In the globalized marketplace, it’s common for businesses to outsource indirect materials and MRO inventory from offshore suppliers to secure substantial savings. However, the more distance there is between you and your supplier, the higher the risk for supply chain disruptions similar to those experienced during the Covid-19 pandemic.
Therefore, in order to build an agile supply chain, it’s often beneficial to use multi-location suppliers spread across different geographic profiles, be it regional, national, or global. You can easily expand your network through industry networking, seeking referrals, or turning to industry associations for insight.
This way, even if you’re unable to source materials from your go-to supplier(s) due to an unexpected disruption, you can quickly turn to your secondary and tertiary vendors so that your manufacturing and supply chain processes can continue running without skipping a beat.
Hash out the details
It’s crucial that you create a list of criteria beforehand to help you in the shortlisting process. A few things to consider are:
- How established they are in your product type, target market, and any other specific needs of your business
- Lead times and availability of necessary materials
- How much importance does the vendor place on quality assurance
- Payment terms and conditions
- Return policies and satisfaction guarantees
Using this list of expected qualities, you can compare potential candidates. Sometimes, suppliers may look good on paper but they may offer services of sub-par quality. This is why it’s important to request proposals and RFQs so that you can judge the quality of their services yourself.
Harnessing supplier insights gives you advantages during the negotiation process. It allows you to pinpoint strengths and weaknesses so you can safeguard your MRO processes accordingly.
You can create contingency plans to address those weaknesses during negotiations to seek better terms and pricing that allow you to come out with an accountability plan and healthy profit margins.
Keeping supplies accountable
Measure and report KPIs
Choosing the right vendor is one thing, but keeping them in check is a whole other challenge. In procurement, you often can’t expect your vendor relationship to be totally problem-free. You’ll have to continuously review service levels and create comprehensive benchmarks and Key Performance Indicators (KPIs) to track their performance and keep them accountable.
Investing in the right materials management software can do the heavy lifting for you because it consolidates all supplier information from across multiple locations into a single platform view. With just a tap of your fingers, you’ll see if suppliers are complying with the terms and conditions of your contract.
For instance, you can score your suppliers using various metrics, like lead times and “on time, in full” (OTIF) rates. If suppliers often delay shipments, then it’s high time to replace them with someone more reliable.
You can also use this information to optimize other areas of your procurement strategy. For instance, you can share and compare data across manufacturing sites to determine how location affects procurement strategies and fine-tune supply chain processes accordingly.
Maintain and leverage strong procurement relationships
A healthy supplier relationship can manifest itself in ways that add value to your business. This could mean shorter lead times, better quality products, higher discounts, and increased customer satisfaction. This is why it’s important to foster strong relationships as you build a resilient supply chain.
Coupled with a cloud-based solution, you can unlock hidden opportunities for optimizing your procurement process. Digitizing your supply chain means you can track where your money moves from start to finish. You’ll be able to identify areas where you can cut back on spending and eliminate poor supply chain practices such as rogue spending.
Tighten up your supplier vetting processes with the right MRO software
MRO market leaders should realize that the success of their business doesn’t solely depend on what they buy, but also on where it comes from.
Businesses should take the time to choose their vendors carefully and select those who not only bring the best value to the table, but who can drive growth, give them a competitive advantage, and most importantly, are reliable.
Harnessing the right MRO software can help you choose and manage your vendors using a data-driven approach instead of one that involves guesswork. Take a self-guided tour now to learn how to optimize your supplier relationships today.