Top suppliers know customers' operations
By Albert Genna -- Purchasing, 11/19/1998
For chemicals and resins suppliers to truly excel, they must understand their customers' businesses. The best suppliers know this and work with customers toward constant improvements in their business relationship.Chemical and plastic resin buyers have many basic traits of good suppliers--product quality, on-time delivery, service, etc. But it is in hidden areas where the real value of top suppliers lie. By working with suppliers, buyers have been able to tap into supplier expertise. This not only improves the most basic areas of the buyer/supplier relationship, but also develops new aspects which can cut errors, reduce costs, and aid future development. But there is only one way to ensure improvements in all these areas--increased communication between buyer and supplier.
Listening and talking
To reap the benefits suppliers have to offer, buyers must let suppliers in close to their own business. "The best suppliers have an ability to function as an extension of our facility," says a purchasing manager in Georgia. "This means listening and being proactive rather than reactive."
The idea of "proactive" suppliers comes up repeatedly from buyers. "The best suppliers have proactive ideas, technological excellence, and idea-sharing," says a vice president of purchasing in New Jersey. "They understand our needs and the process of our internal decision making." In chemicals especially, technological excellence is essential. But it is not enough just to have the technology. Suppliers need to allow buyers to understand their technology--be it laboratory chemistry or their manufacturing process. "Proactive" suppliers share information with buyers and often can come up with new ideas on how their products can better fit into the buyer's own process.
The rewards for suppliers can be substantial, because buyers in the CPI expect long-term relationships to be built out of supplier communication. "Suppliers must be committed," says a purchasing manager in the South. "They must be committed to our industry and to our business. They also must be committed to high quality and to a long-term supply relationship with us."
The key in many cases is a supplier's staff. "They must have fully knowledgeable sales and production staffs that can work as a team to strengthen both of our positions in the marketplace," says the buyer in Georgia. If the supplier's staff is not technically adept and customer oriented, the strengthening of the relationship may not work.
Other traits chemical and resin buyers say they find in the best suppliers include: integrity, responsiveness in emergencies, and commitment through difficult decisions.
Enhance the relationship
But it is not all a one-way street. While proactive suppliers are the ideal, others may need a push. "We help through conferences, visits, and working with suppliers' personnel so that they are very aware of our needs and goals," says the buyer in Georgia. Organizing conferences with key suppliers can help get problems out in the open and explain to them what the buyers really need. Regular meetings with suppliers allow this as do plant visits. "We meet with suppliers on a regular basis, including visits to their manufacturing plants. We verify that what they say is what they do," says the purchasing manager in the South. This builds a sense of trust between parties, but visits also help buyers truly understand the production process up the supply chain.
While asking a supplier's staff to be ready, buyers should also make sure their own house is in order. Is the purchasing staff ready? "We must educate our staff to work with suppliers in an equitable, informative manner," says the vice president in New Jersey. If the staff doesn't know what the goals are, how can suppliers be expected to. A way to overcome this is by ensuring technical and production staff involvement in supplier meetings so that both buyers and suppliers understand what's needed. Buyers say the earlier everyone is brought to the table, the earlier information is actually shared--the better chance of benefits down the road.
Many buyers also place great emphasis on supplier certification. "We have a formal process to certify our suppliers. Depending on the industry it is either a five- or an eight-step process," says the buyer in the South.
Once a supplier is certified, a performance rating process is extremely useful, not for knocking suppliers down, but for showing point by point where improvements need to be made. "Our annual rating of performance is based on nine different criteria," says the purchasing VP in New Jersey. "Suppliers' responses to the ratings and plans for improvement (what specific actions are they going to take) are very important."
What can go wrong?
Even within the best supplier relationships things can go wrong. Sales personnel changes are one big problem--especially after time invested in strengthening relationships with individuals as "the" liaison to a supplier.
Other factors can go wrong too. "If a supplier is bought by another, different business philosophies often come into play and the focus can change," says the buyer in Georgia. These factors are really out of a buyer's control. There is little that can be done other than switching suppliers.
There are, however, other areas in which buyers do have more control. Example: If a supplier is having consistent delivery problems, that is a signal that something is wrong, say buyers. "With the recent railroad situations, even some of the best plastic resin suppliers are up to their eyeballs in transportation problems that are out of their hands," says the buyer in the South.
But sometimes, shipping problems can be avoided. One way is to agree on carriers. "We have a list of preferred carriers and so do the suppliers. Where lists overlap--that is where we agree on a carrier," he says. This buyer also has developed a way to circumvent some shipping problems: "Often we will use our own internal fleet to pick up supplies such as film, paper, or oils. The suppliers will even pay us an allowance, and we can schedule delivery when it is suitable for us." While most of his suppliers are willing to do this, as with any different method it doesn't always work right away.
"Some do it very well, but some have to be led to the water," he says. Many buyers find that the best suppliers are flexible enough to work well with special situations. "Being able to work on this has been a good way to help build better relationships," he says.
For chemical buyers, accurate labeling also is a top concern, and a serious signal of supplier problems. "One mislabeling incident was costly and serious," says an Ohio purchasing manager.
Why are the best the best?
Buyers can cite chapter and verse on what suppliers should do to be the best, but sometimes it comes back to basics. What are the most important criteria for chemicals and resin suppliers? Top concerns for buyers are (in no particular order) on-time deliveries, help with new-product development, research and development department capabilities, suggestive innovations, sales representatives' knowledge, and costs.
Overall, buyers seem to say plastic resin suppliers perform particularly well--but that may be due to the highly automated production process most resin suppliers use. "Manufacturers who use this process as opposed to batch manufacturing tend to be better, because their process is more automated and computer controlled," says one buyer. "The variation of products lot-to-lot is less compared to other products." Among chemical suppliers, buyers indicate that chemical distributors perform best. "It's because service is their business," says one buyer.
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