Keeping a supplier that’s no longer a good fit for your organization can cost you far more than a few hard feelings – it can cost literally hundreds or thousands of dollars, not to mention an untold amount of time and trouble.
COLUMBUS, Ohio (PRWEB) May 14, 2021
Here’s how to know when to fire a vendor – even if they’ve been an extension of your team for a long time.
Whoever said business isn’t personal never lost a job, promotion, client, or customer. It is personal. That’s because business involves people who are in a relationship, albeit professional. While it’s possible to genuinely like someone you’ve done business with, sometimes, the risks of doing business with those you like outweigh the rewards.
Even the most likeable – and long-term – suppliers can disappoint. Unfortunately, less-than-stellar supplier performance is far more common than it should be. Yet because firing a vendor, is not fun, many organizations avoid it. They opt, instead, to stick with the status quo, even if things are below par.
But keeping a supplier that’s no longer a good fit for your organization can cost you far more than a few hard feelings – it can cost literally hundreds or thousands of dollars, not to mention an untold amount of time and trouble.
That’s why it’s crucial to continually monitor supplier performance and look for the early warning signals so you can intervene sooner rather than later.
Here’s how a leading, heavy-truck OEM who faced this issue dealt with it with respect to a major Tier 1 supplier that fell short on product quality and lead time. (P.S. These same key indicators are for you to consider, too.)
1.) Their work doesn’t reflect your high standards.
Quality is quality and there’s no getting around it. Of course, there are acceptable tolerances. But out-and-out rejection due to quality issues? That is a definite problem; especially when it comes to die casting. In the case of the heavy-truck OEM, their old supplier was putting out castings that had uncontrolled porosity issues. Porosity is a measure of the spacing between the material sediments. It creates tiny holes throughout the material that do not conform to specifications.
Though a certain amount of porosity is inherent in the die-casting process, die casting manufacturers can – and should – minimize porosity to deliver parts that are well within your specs. Bottom line? Refuse to accept mediocre results.
At MES, our die casting methodology allowed us to produce a higher quality aluminum elbow casting (which connects a turbo hose assembly on heavy trucks) for the OEM. And, unlike their former supplier, MES die castings met or exceeded the OEM’s standards for durability, dimensional stability, and tolerances.
2.) They fail to deliver on time.
It’s easy to take the quoted lead time from your supplier at face value, no questions asked. But don’t. Ask questions until you understand what their standard lead times are. Be mindful of slipped, pushed, and increasingly longer lead times. Instead, hold your supplier accountable.
As a baseline, it can help to know what average lead times are. For example, “good” lead time from a domestic manufacturer is under 3-4 weeks, whereas “poor” lead time is typically 6+weeks.
This OEM’s Tier 1 supplier was clearly on the “poor” lead time spectrum. Then MES stepped in. In addition to delivering the requested parts within a good lead time, we’ve stocked their castings in our own warehouse, Metrics Works, shortening lead time to a very fast 2 days.
3.) They’re unable (or unwilling) to remedy issues.
In manufacturing, in die casting, in business, issues come up. It’s how they’re handled that makes all the difference. So, it’s important to understand that if your supplier isn’t aligned with how you need them to problem-solve, it will cost you and not them. Such was the case with our OEM and their former supplier. Their costs were too high, not just in terms of dollars and cents, but also on their ability to deliver on time to their own customers.
4.) They take you and your business for granted.
Supplier relationships should be, well, relational. They also should be results-oriented. Our OEM customer’s former supplier had stopped being driven to and focused on solving the OEM’s pain points and issues.
Not MES. We upped our game for this OEM across the board. Here’s how:
We delivered higher quality castings.
We provided a cost-savings opportunity and a 30% savings just by using one of our trusted global manufacturing suppliers.
We reduced their inventory and turnkey, eliminating the need to maintain 6-8 weeks’ worth of inventory at their facility.
We stocked parts at our Columbus, Ohio-based warehouse, Metrics Works, releasing parts only as needed, which meant shipping product just in time (JIT) from the inventory in our warehouse.
We monitored inventory levels and forecasted orders to maintain healthy inventory levels.
Without question, suppliers have a profound impact on your organization’s reputation and profitability. So, you need the best ones for long-term, mutually beneficial partnerships. Suppliers who continue to fulfill your needs are valuable and worth continuing to invest in. If, however, you have issues with a supplier that aren’t resolved, it may be time to severe the relationship and find a better, higher-quality supplier for the job.
MES wants to be your supplier for life. Find out how MES is different in its approach supplier relationships. From aluminum die casting, to inventory, to warehousing, to shipping, we’re ready to earn – and keep – your business. Contact us now.
The MES Solution At-a-Glance
Industry: Transportation – Heavy-Duty Truck Parts
Company Type: Original Equipment Manufacturing (OEM) Performance-Engineered Parts
Size/Rank: Global Leader
Challenge: An award-winning heavy truck supplier had everything it needed to deliver its world-class products – except a reliable castings supplier. So, when its major Tier 1 supplier couldn’t deliver on quality and expectations, they turned to MES for fast, reliable help.
Solution: MES resolved a quality issue related to porosity to deliver a high-quality aluminum elbow casting, just-in-time shipping, and an efficient inventory system.
Results: MES delivered superior castings faster and more cost-effectively. As their new supplier, we helped them realize a 30% cost savings as well as benefit from improved lead times, worry-free inventory management, and bulk storage warehousing.