Did you know that Supply Chain Management involves managing ‘all’ suppliers associated with the sale of a product to the buying company? The company’s Supply Chain Management program should apply to each step taken, by each organization, to transition a product to the ‘end user.’
Multiple Tiers in the Supply Chain
Today, customer service is on the minds of all companies selling products. Therefore, a company cannot take its ‘eye off the ball’ for a second. Companies must take an active role in their entire supply chains, even if there are multiple levels or tiers involved. A failure at any supplier in the supply chain can eventually cause other supply chain issues and failures until it affects the end customer.
Simple or Complex, Failure is Failure
Supply chains can be simple or very complex. Bottled water is a good example of a company with a ‘more simple’ supply chain. In this case, there are a fewer suppliers. The amount of effort needed to organize, manage, and control the suppliers may be less than with some other products.
In contrast, the assembly of an automobile is a good example of an extremely complex and vast (read ‘deep’) supply chain. The resources needed to organize and manage this supply chain are very significant. In either case the failure from any of the buying company’s suppliers can mean delay and lost time meaning additional costs.
The Supplier Approval Process
It is understandable that a buying company does not have enough resources and time available to evaluate all suppliers that may be in a supply chain for all of its products. But there are some methods that can help accomplish this task indirectly.
One way is to ensure that any new supplier, approved to do business with the buying company, have its own approved sourcing strategies, policies, and techniques in place to evaluate and approve new suppliers. This would include requiring each of their suppliers conduct this same process. In this way, the buying company influences the entire supply chain of the product even though there are numerous tiers. This process could be repeated to the bottom (or origin) of the supply chain.
Managing the Supply Chain Management Process
But Supply Chain Management is much more than what we have outlined up to this point. Organizing, controlling and managing your company’s suppliers, is challenging. Furthermore, requiring the same supply chain management of your ‘tier one’ suppliers is demanding but necessary because this process leads to a ‘higher probability’ of overall success in the entire supply chain.
Moreover, it is possible to develop a more ‘advanced’ supply chain management program with suppliers, i.e., a plan where the supply chain shares greater amounts of information backward and forward. Certainly, this sharing of information leads to higher ‘on-time’ deliveries. But even more important may be the additional benefits (read ‘better cost control’) to all parties in the supply chain.
The Bottom Line
Supply Chains can have different levels, and can be simple or complex. But in the end failure is failure. It is important to have a solid Supplier Approval process. Furthermore, by managing the entire Supply Chain Management process, including requiring suppliers in your first tier to manage the additional suppliers that supply them and so forth, you increase the probability of the overall success of your supply chain. Finally, sharing more information and building trust can lead to additional benefits (i.e., ‘better cost control’) to all parties in the supply chain.
Manufacturing and Supply Chain Services
We are Manufacturing and Supply Chain Services, MSCS, specializing in ‘enterprise wide’ Procurement and Supply Chain Management programs. We have been working in this profession for 30 years.
We provide a current assessment of your supply chain processes. Next, we work with you to optimize your supply chain through advanced supply chain management techniques. Our company’s proprietary processes and services promote the organization, control, and cost reduction boosting your company’s bottom line.
We’re not satisfied until you are satisfied. How can we help you? Learn more about MSCS’s procurement and supply chain programs. Contact Us.
Supplier Evaluation and Approval Process. The reason companies perform assessments, of a potential supplier’s operational capability, is because their performance, as well as that of the other suppliers in your supply chain, will affect the buying companies overall performance. For more on this topic, please follow this link.
Supplier Performance Management. It is important for the organization to ensure that suppliers perform as required, so that the buying company serves and satisfies its end customers. Therefore, the next step is to monitor and manage the supply base ensuring that the company meets its goals. For more on this topic, please follow this link.
Procurement Strategy. Executives today expect results. Procurement spends half or more of every dollar the firm receives in support of operations. Because of this, the procurement group is expected to play a much larger role and bring value to the entire business enterprise. For more on this topic, please follow this link.
Manufacturing and Supply Chain Services
We are Manufacturing and Supply Chain Services, MSCS, specializing in ‘enterprise wide’ production and operations management programs. Our company’s proprietary processes and services promote organization, control and cost reduction boosting your company’s bottom line. How can we help you?