Praxair TARGETs performance improvement
By Staff -- Purchasing, 2/10/2000
Purchasing at Praxair Corp., the Danbury, Conn.-based supplier of industrial gases and products to the CPI, has had a supplier management program in place for the last four years. Part of this program is to determine the company's best suppliers for the development of closer relationships and more long-term business.Frank Crespo, Praxair's global vice president of procurement and materials management explains that the goal of the program is for a supplier to reach "preferred status," which entails volume purchasing benefits for the supplier and improved efficiencies and reliable supply for Praxair.
Selection to the "preferred" list is essentially a commodity-driven decision, determined by the supplier's performance under certain criteria, which are consistent with Praxair's operations around the world, according to Crespo. "These criteria are represented by the anagram, 'target,'" he says.
The criteria follow:
Technology--This deals with the technological compatibility that exists between the capabilities suppliers offer and Praxair's technological needs. "We ask if suppliers' technology roadmaps align with our own," says Crespo.
Assurance of supply--Crespo monitors suppliers' levels of performance in terms of delivery. Questions Praxair asks of its suppliers include: Has the supplier demonstrated that they can consistently provide what they say they will provide? What if a product is needed sooner than anticipated? Is the supplier able to respond quickly and effectively under adverse situations?
Responsiveness--This criteria involves the suppliers' reactions to Praxair's overall supply needs. How well do suppliers respond to quality issues? How quickly do they respond to changes in demand? How thorough are they with problem resolution? Is Praxair a customer that they truly value and want to work with toward continuous improvement, or is Praxair viewed as just another account?
Global reach--Do suppliers have the capability to extend their services to other regions of the world? According to Crespo, Praxair operates in more than 40 countries. "Where it makes sense to have one supplier supply to multiple regions, we aim for that type of supply relationship or agreement," he says. "Praxair places a high degree of value on those suppliers that have the capability to deliver product and service across multiple geographic regions."
Environmental and safety concerns--"We are very serious about safety standards on our properties, and we want to align with like-minded supplier companies that have environmental and safety standards in place that are similar to our own," Crespo says. Do their programs have upper management endorsement and support? Is there a formal program dealing with safety concerns or is it something that is handled as second nature by personnel at the site level?
Total cost of ownership--"We look at the whole procurement and supply process," Crespo says. "We're very interested in cost management, so we focus on the costing structures of our commodities and break them down into their various components. We do this not necessarily to attack profitability, but to look for cost-reduction opportunities," he says.
Performance tools
Praxair's Frank Crespo says that one of the ways his company will continue to keep communication with suppliers and monitor their performance is through a newly developed system called the supplier feedback response system.
Because Praxair operates in more than 40 countries and in various regions of the world, it became necessary to indoctrinate a system to monitor performance and answer questions that would not be subject to language barriers.
The system, a multi-lingual database, was launched on the first of this year, but has been in development for several months. It gives the company the capability to communicate with personnel operating Praxair plants in various countries and regions of the world, using an intranet-type database link.
Currently, the system is available to translate Portuguese to English and vice versa, but Spanish, Italian, German and French editions are planned for release in the near future.
"The database tool enables the very important process of gathering and handling feedback from all Praxair employees," says Crespo. "Feedback comes in the form of performance information on the company's various suppliers and the goods and services they provide, as well as feedback on Praxair's purchasing and procurement processes, organization and people," he says.
"If there are issues with suppliers in terms of the quality of product delivered, or the responsiveness received from the supplier when problems arise, they have the capability to lodge their concerns and receive a response in their native language using our online LOTUS Notes database," he says.
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