How to: Identify Available Suppliers
By Staff -- Purchasing, 6/14/2007 2:00:00 AM
This is the third installment in our series on how purchasing staffs at a variety of companies organize their strategic-sourcing activities. Other installments in the series ran in the March 1,How to Analyze the Supply Marketand May 3,How to Select A Sourcing Strategy.
This series is more of a conversation than a tutorial, and we want you to join the conversation. Send your comments to pteague@reedbusiness.com , and write "strategic sourcing" in the subject line.
Talk with other buyers
To identify potential new suppliers, buyers at Sun Microsystems talk with purchasing colleagues within the electronics industry and tap into the expertise of market researchers as well as Sun's current suppliers.
"We have contacts at other OEMs in the industry," says Michael Riley, senior supply base development manager for Sun Microsystems in Santa Clara, Calif.
"I have peers at Cisco or Dell or other major OEMs that are doing similar things that we are from a technology standpoint. We can share information within a particular market segment about which suppliers are the leaders and who are the up-and-comers that might challenge those leaders in the future," says Riley.
Another source for identifying new suppliers are market researchers who specialize in benchmarking.
"There are researchers who track commodity trends and consolidations as well as emerging new suppliers," he says. These new suppliers may or may not become Sun suppliers, but they are often considered when Sun has a need.
Riley says Sun's current suppliers can often unwittingly be a resource to identify potential new suppliers.
"You have to read between the lines sometimes, but suppliers' behavior will tip us off on who is up-and-coming," says Riley. "After dealing with certain suppliers over the years you know them and can figure out which new suppliers they are concerned about or are afraid of. They sort of give it away," he says.
Riley says that Sun considers potential new suppliers for technology, quality, supply constraint and price competitiveness reasons.
For example, Sun does periodic technology reviews with suppliers to make sure they are heading in the same direction as Sun.
"If none of them are going in the same direction that we want them to go and we can't convince them to go in the same direction, then we need to look outside for new suppliers," says Riley.
 “Having three suppliers gives you an extremely competitive environment and gives you a backup.” –Michael Riley |
Sun generally has two or three suppliers for each commodity. "Having three suppliers gives you an extremely competitive environment and gives you a backup if there are problems," he says.
—Jim Carbone
Check the clock
Describing herself as "a professionally active buyer with 20-plus years purchasing experience in a wide variety of manufacturing companies," Karen Chinich isn't shy about researching potential new suppliers by checking with other buyers, engineers, sales personnel and even the media.
"After you've determined what you need to buy, the most important aspect of identifying available suppliers is to determine how much time you have to look for them," she says. "Once the time element is understood, then the clock starts ticking on the identification process," says the corporate buyer at the Fair Lawn, N.J., headquarters of Sandvik Inc., an industrial group that makes such products as cemented-carbide cutting tools and other products used by metalworking, mining, rock excavation and construction companies.
"I have developed a process which is the result of day-to-day work experiences added to useful concepts learned while participating in professional purchasing seminars," she says.
 “The most important aspect of identifying suppliers is to determine how much time you have.” –Karen Chinich |
Here's how she does it:
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Look at the approved list of suppliers already in use by other divisions and/or sister companies to see if any of their suppliers can be considered.
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Ask resources within your company including buyers, product managers, engineers and salespersons for their recommendations.
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Ask such resources outside your company as suppliers, and purchasing professionals (and even teachers and friends) for their recommendations.
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Use the Internet's search engines, such as Google. Look into a particular product or commodity type to find the key manufacturers or distributors within a specific location, whether U.S. only or global.
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Check out potential suppliers' websites.
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Use "purchasing" sites on the Internet to identify available suppliers.
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Reference Purchasing and other supply chain magazines, product-related trade publications, newspapers and other journals.
8. Look into tradeshow advertisements and/or listings. -
Use the published or Web-based databanks for current available U.S. supplier data.
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When all else fails, send an internal e-mail within your company, to see if anyone has any suggestions.
—Tom Stundza
Ask fellow employees
In the late 1980s, The Timken Co. in Canton, Ohio, made some tough decisions about whether to manufacture such parts as bearing retainers—or cages, as the company calls them. A retainer is the stamped component that holds the rolling elements onto the inner race of a bearing. When the company decided that manufacturing bearing retainers wasn't a core competency and that it needed to close facilities that made the parts, it turned to purchasing for help selecting suppliers that could do the job instead.
"We identified potential suppliers based on companies our competitors were using," says Mike Warn, a purchasing manager with a mechanical engineering background who was involved in coming up with that initial list.
"That was hard, because Timken always put great effort into not being at the same place as our competitors. As we moved forward it led us to a very good key partner that we are still using today."
 “At the time we identified suppliers based on companies our competitors were using, which was hard.” –Mike Warn |
Eventually the purchasing operation needed to come up with additional bearing-cage suppliers to take on more of the manufacturing work.
"We identified several players in the marketplace that we chose to align with, and began to work to develop capabilities of the suppliers," says Warne.
The supplier development activity included Timken sharing its knowledge of manufacturing bearing retainers.
Today, when the purchasing operation draws up such a list, the buyers:
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Use the Internet to search for potential suppliers that may fit based on descriptions of their capabilities and skill sets.
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Use knowledge the company has acquired over time to come up with names of other companies. These may be references from current suppliers or companies that work with Timken's competitors. Trade shows are also a good source of information on potential suppliers.
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Tap knowledge of Timken employees working at its facilities around the world. This resource expanded upon Timken's acquisition of Torrington in 2003.
—Susan Avery
Never stop looking
Finding new suppliers in today's global, Internet-enabled economy certainly isn't the same as it used to be. Scott Paull, CPO at $2 billion process-control system manufacturer KLA-Tencor Corp. of San Jose, Calif., says that supplier discovery in the era of global sourcing has shifted from an event-focused process to a continuous process of looking into new markets and finding potential long-term sources of supply. And, he says, while the Internet has brought a lot of convenience, it can also bring "information overload" to sourcing professionals looking for successful leads.
"The Internet can be a very useful tool in supplier discovery, but because it's become so broad and diverse, it's not particularly discriminating," Paull says. "Generic Web searches usually don't provide the best leads for potential suppliers. The best leads usually come from sources you know—internal sources, existing suppliers, peer companies and benchmarking projects."
Paull recently provided Purchasing with several key strategies for global supplier discovery, noting that the strategies are not Internet-specific, but certainly Internet-enabled, meaning they can move along much more effectively thanks to online communication and tools.
 “Generic Web searches usually don’t provide the best leads for potential suppliers.” –Scott Paull |
Chambers of commerce and other local government agencies can provide a good list of companies in a new country or region. Paull suggests economic development boards and other similar agencies are the best bet. "For example in Singapore, the investment or trade arm of the government is very helpful. They are online and provide useful leads."
The World Bank's International Finance Corp. funds investment in local regions and can provide leads on suppliers. Paull says it's a good source because most companies listed have gone through some kind of screening process to be included.
Consultants with expertise in connecting buyers and suppliers in new regions are popping up all over the place. While they come with a cost, often their research and expertise can pay for itself by finding the right suppliers in low-cost regions.
Trade fairs are still a successful method of meeting new suppliers face-to-face, both at home and abroad. Paull points out that researching the event itself can save buyers a trip to a less mature fair with few suitable suppliers.
"We go into them with a supplier development perspective to test the waters for the overall supply base in a new region. We typically don't go to those events expecting to find an exact supplier for a specific material."
Existing suppliers can often refer buyers to new suppliers in related fields. "Sometimes if you're looking into a new region or country, one of your suppliers may have a factory or a supplier of their own in that region and can provide insight and knowledge," Paull points out.
"And," he says, "you can ask your supplier who their competitors are in different regions."
—David Hannon
Web Exclusive: Collaborate with contacts
Though his strategy varies depending on what he needs, buyer Ken Reinartz at Minneapolis, Minn.-based Personnel Decisions International (PDI) often finds suppliers in coordination with the department within the company for which he’s buying. PDI is a global human-resources consulting firm with 28 offices around the globe. For example, Reinartz, who procures office supplies and equipment in addition to printing, temporary labor and freight, says when looking for a new book printer for PDI recently, it was a joint effort with his printing department to find the right fit. Though PDI had a printer in-house, the printing department, in a show of internal collaboration, did the initial search on the Web for a new printer. When it came time to meet with the potential supplier, Reinartz coordinated the meetings and presentations with the supplier to determine if they could meet the company’s needs.
For small-package shipping, Reinartz relied on supplier information through his professional contacts at FedEx, UPS and DHL.
“Based on what we knew, we decided between those three,” he says.
While PDI had a supplier in place for small-package shipping, the last time he did a supplier comparison was about five years ago. It helped greatly to have contacts at each shipping company to understand what each shipper could offer PDI, and especially if they consolidated shipping orders to just one supplier.
For buying other items, like office copiers, having industry contacts made finding a supplier simple.
“The vendor contacted me,” Reinartz says.
It’s never a guarantee of business with that supplier, but it can cut down on searching time.
—Maria Varmazis
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