A poll recently conducted by the Chartered Institute of Purchase & Supply (CIPS) highlighted that nearly half (45 per cent) of buyers surveyed admitted they had no plan B that stretches down the tiers of supply chains if plan A fails. Additionally, less than a third of buyers had a back-up strategy in place, while a fifth were unsure if they had a plan B or not. While day-to-day operational issues can be time consuming for buyers, output and service levels can quickly slip if time is not taken to strengthen supply chain efforts.
The reality is that once suppliers are contracted and in place, it is not always possible to simply switch to a backup vendor if a problem with a delivery occurs. This means that buyers have to make certain that a supplier is competent enough to be relied on in the long-term and also innovative enough to have alternative sourcing strategies in place. This takes away the need for the buyer to arrange this themselves and acts as a signal of good supplier service.
The quality of service a supplier can offer needs to be comprehensively checked before any contractual agreement is signed. This can be facilitated by reviewing testimonials or references from their previous clients and even speaking directly with these customers to properly qualify the capabilities of a vendor. This more objective input provides a backup for individual claims made by suppliers and allows buyers to make a more informed decision.
Even where buyers are satisfied with a suppliers credentials, it may be worth implementing a trial period in order for a supplier to prove that they are able to deliver to particular specifications. Consider simulating a particular problem to test a suppliers ability to source from a separate provider in order to meet the brief.
For example, the trial period could include a number of scheduled key orders. As part of a rehearsal, the supplier could imagine that their usual vendor has failed to get key items to them on time. This would then challenge their ability to source separate goods and deliver on time despite the barriers. This might seem rigorous, but is a good way to determine if a suppliers service levels will suit a buyer in the long-term.
Once a supplier has proved themselves and a partnership seems likely, there is one more essential stage to tick off the agreement of strict key performance indicators that incorporate sufficient due diligence to ensure excellent service continues.
Of course, the nature of a suppliers offering has a bearing on the cost efficiency of the service they provide. As part of the short listing process outlined above, it is necessary to ensure that one vendor can meet multiple needs through a fully consolidated offering. Not only does this mean buyers receive one level of service for multiple needs, but the cost of sourcing products individually is reduced.
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Once on board, buyers should continue to monitor the progress of suppliers by regularly checking KPIs and ensuring that timely reviews are put in place. This ensures suppliers remain motivated to offer excellent service levels consistently and provides the buyer with ongoing reassurance. In turn, suppliers must proactively demonstrate that they are able to add value to the relationship through using intelligent stock monitoring systems and anticipating the future needs of buyers.
The CIPS study provides a timely insight into how much pressure buyers are under in terms of meeting operational targets. However, without properly investing the time in testing the abilities of suppliers around deliveries and contingency planning, a layer of unnecessary risk is created that ultimately affects customer service levels. This sets a dangerous precedent at a time when both customer expectations and competition levels are high.
Nigel Crunden is a business specialist at Office Depot.