Best Practices in Supply Base Management

Quantitative and qualitative data in this report include: delivery and quality performance, reduction of complaints, reduction of suppliers, decrease in material rejections and percentage of cost savings.

Business Operations > Supply Chain Management

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Key Findings

Best Practices, LLC was able to identify and profile the most effective practices embedded in these companies' winning supply chain management strategies. More than 100 fast reading but vital pages of information are presented in this report. A few of the many findings include:

Assess and measure supplier-partners through certification, audits and other quality reviews to develop effective partnerships. Leading companies assess suppliers before entering into partnerships or other business arrangements with them. Such initial and ongoing review can include surveys, audits and certification. Certification establishes a common language that in turn fosters an increased level of trust and understanding between partners. Certification also raises confidence in supplied services and materials, giving the company the freedom to rapidly — or even immediately — place those supplies in its own lines.

Excellent companies often certify suppliers at different levels, reflecting the strength, depth and maturity of the relationship. Initially, detailed audits and operational reviews are typically conducted to reveal supplier capabilities and potential synergies before supplier selection or certification occur.

Integrate suppliers/partners into processes and development early. Automakers have been leaders in this concept of involving partners in their business processes from the design stage on. The result of this organized and planned cooperation:  streamlined processes, improved products and reductions in costs.

Foster communication with and between partners. Extensive communication mechanisms are necessary to establish “deep” supplier relationships.  Rather than choosing one or two ways of working with their vendors, world-class companies employ a plethora of communication tools such as cross-functional, cross-corporate teams to promote the exchange of objectives and ideas.  Moreover, high performing supply chain management companies encourage interaction with key suppliers at all levels of the organization, particularly upper management.

Reduce suppliers to reduce costs and share cost savings with preferred suppliers. Leading companies use criteria to screen suppliers for business. Through this process and others, companies reduce their supplier bases, forging closer relationships with remaining suppliers that in turn leads to lower total costs and inventories, improved working capital and better products.  Narrowing the supplier base also benefits remaining vendors, who usually increase business volumes in exchange for lower unit pricing. 

These are the headlines from just a few of the 200 insights gathered in the report. Download the report summary for even more detailed information.

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