How buyers ensure top supplier performance
By Susan Avery -- Purchasing, 11/18/1999
To corporate purchasing managers, the mark of a top-performing supplier of computer equipment is simple: unwavering support and service.After all, it is the responsibility of corporate purchasing to ensure that the PCs they buy are reliable and meet exacting requirements of their internal customers--and customers demand machines that are dependable.
In measuring performance of computer equipment suppliers on service and support issues, therefore, purchasing managers mainly gauge the satisfaction levels of their internal customers. In so doing, many buyers may enlist the assistance of their organization's information technology (IT) function to track number of service calls and number of hours that equipment is down.
Says one buyer, "Suppliers have to do what they say they are going to do--regarding service and delivery. They also have to prove that they know our business and provide us with continuing support. If there are problems, we bring in potential new suppliers."
How Tektronix does it
At Tektronix, Beaverton, Ore., Caren Weiner, technical procurement manager, regularly keeps tabs on performance of the engineering company's computer equipment suppliers. Tektronix buys the majority of its computer hardware for engineering design, development, and test. On the business side, the company runs ERP applications, office productivity software, technical writing software, customer service call handling software, HR applications, etc.
So, "we regularly purchase PCs, notebooks, ultralights, NT workstations, UNIX workstations, NT servers, UNIX servers, as well as peripherals such as zip drives and scanners," says Weiner. "Tektronix is unusual in that we self-maintain all our computer equipment, including the large Sun Microsystem servers that run our mission-critical business applications. Therefore, we also regularly buy spares and replacement parts."
Tektronix' strategy for purchasing computers is to acquire desktop hardware and peripherals through a reseller and to buy UNIX equipment direct from the manufacturer. In 1995, the company outsourced the procurement of desktop hardware and software to Inacom (formerly Vanstar), which established an on-site operation, with dedicated resources for Tektronix called "the PC Superstore." This was done for several reasons, says Weiner. "Desktop hardware procurement is highly transactional in nature with a very diversified supply base, and the procurement organization has moved away from tactical order processing to more strategic supplier management. Another key reason is to improve leverage with the OEMs in terms of product availability and pricing. By utilizing the services of a VAR, we were able to gain access to a wide range of distributor relationships and to provide systems capabilities well beyond what we would ever have in-house. This allows for our orders to be expedited and customized reporting covering such things as delivery performance, commodity reporting, and order accuracy and it achieves significant cost saving as well. Even though we purchase through a VAR, we still maintain close contact with the OEMs and expect the same levels of service from them as if we were purchasing directly."
On the UNIX side, Tektronix purchasing established a relationship with Sun Microsystems a number of years ago. As an engineering company and self-maintainer, "it is critical that we have a direct relationship with an OEM so that we are aware of the latest product developments and technical changes in the products--and we can have working relationships with key contacts throughout the organization when we need their assistance to maintain a 7 x 24 operation."
Tektronix has a formal preferred supplier program. "Our goal is to purchase required equipment at the lowest total cost from best-in-class suppliers," says Weiner. "We believe that in order to accomplish this goal, we will need to carefully select the right suppliers and work closely with them to improve and strengthen them as necessary to meet the goal. To be considered for the preferred designation, a supplier must consistently meet Tektronix' expectations in the areas of quality, technology, customer service, and business practices. The process followed includes a performance rating that is done on a semi-annual basis by internal stakeholders in different parts of the company, and a resulting "report card" is incorporated into the annual supplier review. In addition, semi-annual customer satisfaction surveys are sent out to end users for the PC Superstore. Results of this survey are shared with the superstore team, and action plans are developed around the responses. We monitor on-time delivery and order accuracy on a daily basis."
Both of these suppliers have attained preferred-supplier status and are performing above expectations.
When corrective action is required, "we make sure that someone from both Tektronix and the supplier are assigned ownership of the action items," says Weiner. "We have had a history of open communication with both Sun and Inacom. Vice presidents from both of these suppliers and Tektronix attend the annual supplier review meetings, so our issues receive high-level attention. We have not had many performance issues that were not corrected quickly."
Similarly, Bruce M. Hartley, director of purchasing, Pasteur Merieux Connaught, Swiftwater, Pa., buys mainly desktop and notebook PCs, servers, routers, software, and peripherals. His strategy is to negotiate agreements with specific computer equipment OEMs and software publishers based upon a standard configuration identified by the company's IS (information systems) function.
"We measure supplier performance against a delivery standard of three days for a desktop, five days for a notebook," says Hartley. "In addition, we track each model standard against warranty programs through component failure analysis."
Current on-time delivery performance is 97%. "We have found that when we have problems with deliveries, it has been caused by the manufacturer--not the distributor," says Hartley. "Most of the time, it has been when the manufacturer gets ready to phase out a specific model type."
When thresholds have been exceeded, "we have eliminated certain models from the standards list," he says. "In some cases, the manufacturer may be taken off the approved list if their quality performance is unacceptable."
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