As an ISO 9001: 2008 certified contract manufacturer (CM), Fusion OEM is required to conduct annual supplier reviews. Having a formal system in place to track and evaluate supplier performance is essential to the smooth operation and profitability of our business. The ISO 9001:2008 standard states that suppliers should be evaluated and selected based on their ability to meet our requirements. In order to accomplish this, we first had to define what those requirements are. Next, we created specific performance criteria for tracking and assessing our suppliers. After taking several factors into consideration, we arrived at the following three qualities that make a supplier successful (it may not be what you think):
Quality of Service. The relationship with your supplier is a business partnership, and if both parties are on the same page, the partnership will be a success. At Fusion OEM, we consider our suppliers and vendors part of the team and treat them as such by communicating often and openly. Consequently, we expect the same in return. It’s not just the product that we consider – consistent lead times, insightful customer support, on-time delivery, and business stability are all critical factors to consider when evaluating which suppliers are a good fit to meet our client’s expectations.
Corrective Actions. How many corrective actions have we had to issue a supplier? How many products had to be scrapped or returned as a result of the supplier failing to meet specifications? How many customer complaints were received due to a bad part or service from a supplier? These questions are examined on a routine basis during our Internal Audits, another ISO 9001:2008 requirement of an effective quality management system. By generating data, at the start and throughout the course of the supplier relationship, we can track performance, observe patterns and develop recommendations and opportunities for improvement. Issuing Corrective Actions allows the supplier to correct the problem, which then helps develop their performance and drive the conversation towards continuous improvement.
Quality of Product. Obviously cost is an important criteria for selecting and evaluating suppliers, but it is not the only factor. It is entirely possible that a vendor can have the lowest price and the lowest quality of work. At Fusion OEM, we realize that dependable and stable suppliers are sometimes worth paying extra for. In the world of contract manufacturing, the less variation coming into our processes, the easier it is to keep consistent results.
No matter what industry you are in, suppliers and vendors play a vital role in your company's success. Your business should have a system in place for evaluating, selecting and then reevaluating the suppliers and vendors it works with. Successful companies embrace their suppliers and vendors, viewing them as partners in helping to grow the business. Making sure that this is a mutually beneficial partnership will impact the price you are negotiating today and the quality of service you get in future.