Managerial thoughts

Managerial  thoughts

Make your suppliers your reals partners to improve the business of your company

The supplier is another player in the immediate environment of company. it  must be considered by the managers when looking for solutions to improve the performance of their company.


The diversity of suppliers and the severity of the quality control, as we were advocating in the recent past can ensure the supply of the company in the best conditions of cost, quality and lead time? We will be attempted to say yes, but if we rely on one of the gurus of the quality of the 20th century, W. Edwards Deming[1], we would say no. This one suggests to the company to reduce the number of suppliers and establish instead a close and trusting relationship with them.



Suppliers, from suspicion to trust

Indeed, the classic method of selecting suppliers based on the optimization of the cost equation, quality and lead time, are still valid, but the competitive context in which the company operates today, drove the management to imagine alternatives to reduce the supply costs without jeopardizing their requirements in terms of quality and lead time or jeopardizing the image of their company towards its customers.


Can the company ensure the quality of the merchandises purchased only by performing the receiving inspection as it is practiced today?


The answer is, of course, no. The receiving inspection activity by sample or at 100% is not enough to ensure the quality of purchased products. At the best, it prevents lots of defective products to be accepted.


What would happen when the company rejects a lot of products of which the replacement by the supplier may extend the lead time of manufacture and thus undermine the commitments agreed with its customers?

The company will probably lose some of its customers or at the best it will breed an atmosphere of mistrust with its customers. In both cases, this situation does not help the company and jeopardizes its image in the market.


Dialogue with suppliers is another important action that the company introduced in the 70s in its improvement plan of the quality of purchased products.


Both parties expose frankly the problems they have and the challenges they face to meeting their contractual obligations. They shall identify the causes and together they take corrective and preventive actions. Thereby improve relations and build trust between the company and its suppliers.


Once the trust is established, the company could significantly reduce its receiving inspection costs by using only the inspection report of its suppliers. It’s a very simple way to reduce the purchasing costs of the company.


Supplier, from trust to partnership


Before eliminating the receiving inspection for its suppliers, the company should take several actions of surveillance audits. The managers of the company have to ensure that the suppliers have the facilities, organization and skills to provide products with the required quality and at the best possible price.


Regarding sub-contractors, W. Edwards Deming went even further in his remarks for the quality improvement, he proposed to the company to associate them at the key stages of the marketing of its products, from design to production.


The Just in time (JIT) is one of the approaches that many companies, especially Japanese have taken to reduce their stock at the beginning, during and at the end of the manufacturing process.


Those companies have made the JIT a requirement for building the partnerships with their suppliers and subcontractors.


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[1] W. Edwards Deming was an American statistician, known for the “Plan-Do-Check-Act” (PDCA) cycle popularly named after him. In Japan, from 1950 onwards, he taught top management how to improve design, product quality, testing, and sales. He made a significant contribution to Japan's later reputation for innovative high-quality products and its economic power.


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