"Since soldering is the core process of electronics manufacturing, we believe company executives and purchasing people should participate in Science of Soldering workshops. Making good decisions can be impossible without understanding the critical process parameters."
Suppliers can be your best friends. Or they can be your worst enemies. Sometimes they can be both. It depends in large part on how they are managed.
Never take a supplier's word about technical issues
Effective supplier management requires you to have complete and profound knowledge of processes both internally and at the suppliers. Since soldering is the core process of electronics manufacturing, we believe company executives and purchasing people should participate in Science of Soldering workshops. Making good decisions can be impossible without understanding the critical process parameters.
Always be skeptical of supplier claims. Always remember that:
- The supplier's objectives may conflict with your own; it isn't likely that the supplier wants to help you find a better part at lower cost from another reliable supplier
- The supplier may not know as much as he wants you to believe; this is especially true when suppliers are captured by conglomerates that see technical assistance as a cost rather than a benefit
- The supplier can't know your operations and needs as well as you must
- Putting your survival in another party's hands is careless
- If you fail, you lose your livelihood but the supplier only loses a customer
That doesn't mean supplier input shouldn't be sought. However, when the answer isn't clear, turn to the most powerful word in the English language — Why? If the answers don't make sense after several repeated "whys," assume the supplier doesn't know and you need better advice.
Effective purchasing goes beyond piece price
Effective supplier management begins with selecting suppliers. Whether the right decisions get made at this point depend in large part on how the purchasing department's performance is measured. Evaluating purchasing decisions on the basis of lowest piece price rather than total cost that, among many other considerations, includes:
- Piece price
- Reliability and suitability of parts and materials (old stock is just one way that a poorly chosen supplier can cause serious problems and costs for the production department)
- Timely delivery (flying in parts from the other side of the world can quickly eliminate any price advantage)
- Communication problems (time zone and language differences)
- Financial stability (the costs of a key supplier failing can be crushing)
- Understanding of the customer's requirements; dealing with the fallout when a supplier wrongly claims that the part has been qualified to automotive or aerospace levels is not fun
- Ability and willingness to respond when things go wrong
Some simple operating principles
Some simple operating principles can reduce the risk of making bad purchasing choices. A few of those principles include:
- Pay a premium, if necessary, to get the most reliable supplier of critical assemblies and materials; it will save money in the long run
- Stick with suppliers you know and value
- Be an important customer rather than an afterthought
- Spend time in the supplier's factories
- Pick suppliers close to home; there's no substitute for the ability to drop in at the supplier's plant unannounced
- Don't believe that an ISO certification demonstrates real competence; in some parts of the world, certifications only show the company paid the certifying firm
- Treat suppliers as partners; a failing supplier hurts the customer, too
Outsourcing considerations
When considering outsourcing production that has been performed internally, take time to think through the implications, such as:
- Oversight responsibility doesn't end when the internal plant closes; it's still your name and reputation on the package
- The possibility that the supplier may become a competitor
- Keeping the engineering edge becomes more challenging without a production department to keep the product developers rooted in reality
- The reason outsourcing seems cheaper — is it because of greater efficiency, currency quirks, less stringent pollution controls, inhumane working conditions, or something else?
- The possibility that the supplier's bid was defective because the supplier is inexperienced (these mistakes always end up costing the customer as well as the supplier)
- And, probably most important of all, whether it's possible to resume production in house — and, if so, at what cost and timing
When things go wrong
There will be times when even good suppliers perform badly. The most common problems are defective parts or materials. Purchase orders must always include a formula for claiming compensation for the supplier's error. Simply replacing the parts is acceptable if the problem is caught before production begins using those parts. But there will normally be scrap costs, expedited shipping costs, unhappy customers and more. The supplier must be responsible for all those costs.
When the supplier refuses to accept responsibility for the problem, we can help. You can reach us by email or phone at (01)727–866–6502 ext. 21.
