The January-February edition of Professional Purchasing’s lead article is “Avoiding Scams and Dishonest Suppliers”
We at Proficient Sourcing provide supplier candidates to those seeking improvements in their supply chain or need someone new for outsourced manufacturing, so this was a wonderfully appropriate article.
Among the many issues raised in this article are count errors, invoice prices not matching purchase orders, product count listed on packaging not matching what’s inside, and weights listed in “error”.
These problems are either an indication of slop or dishonesty. We strongly recommend looking elsewhere for suppliers if you are experiencing such issues other than a one-time basis. What supplier situation would justify retaining such a supplier?
We have a number of recommendations as you evaluate a new supplier, or even wish to further investigate one who has provided adequate performance so far. Let’s look at some special circumstances:
Obviously, there is a wide variety of buyer requirements that make qualifying a new supplier everything from pretty easy to extremely complicated. For example, finding a machine shop to make a simple machined part should be relatively simple, as there will be many to choose from.
However, there are several situations on the other end of the complex scale. One is if you need someone to precisely machine a 20,000 pound casting (or very high precision of most anything) that’s a one-off or infrequent reorder. Another is a medical device, requiring multiple layers of regulatory/legal review. Or perhaps a DOD part requiring special materials, or some micro machined part. A new product offering is yet another difficult situation, due to the many things that must happen before the first product is sold.
All these situations are limiting, because the special capabilities required are not common. And that means your ability to detect potential supplier problems will be even more important. Mistakes with such situations means major problems! Proficient Sourcing was created to help in just such situations, and should you wish help in finding good candidates, we hope you’ll give us a look: https://www.proficientsourcing.com/.
Such circumstances make supplier proximity especially helpful. Not only is delivery easier, and probably cheaper, but the ability of both sides to visit each other is enhanced. Visiting is one important tool to improve the chances of success. We have long advocated visits by both sides.
Interestingly, Professional Purchasing also has a “Researching and Benchmarking Report 2021”. One thing reported is “The average percentage of supplier sites visited was 7% in 2020… .” Of course, many situations do not justify supplier visits, but if you are experiencing some of the difficult ones we’ve listed above, a supplier visit should be high on your list of to-do’s.
There is no substitute for face to face interaction with people important to the success of your business. Getting to know your key contacts cannot be but helpful as time proceeds.
It’s also important to see the facility where your product or part is to be made in. Several things can be learned; and among these are:
1. Is the shop area well organized? You may not know anything about manufacturing procedures, but good shops LOOK like they are organized. Clutter and disarray should be warning signs of problems later on.
2. Are people generally working in activities that appear to be constructive? Again, you may not know much, but just watching what the people are doing can reveal a great deal. If they look busy and focused on some business-type thing, chances it’s an effective shop. It may not be a low price operation, but you can get a feel for whether you’d be confident that things made there will be done correctly. Our view is this not only applies to shop workers, but those in other parts of the business as well. The quality area in particular should be carefully analyzed for signs of casual behavior.
3. If you’re dealing with large things, look at the capacities of bridge cranes and other lifting devices. Can your parts be handled easily? This is particularly important if your parts require multiple steps, meaning multiple handlings within the shop. Is there space between fixed objects to maneuver your parts easily?
4. Look for things like yours as you visit the shop; ask for similar work examples. The shop should be eager to demonstrate some experience with your type work if they want your business. Perhaps better yet, can you get references of companies with similar requirement? Recognize security issues may preclude exact information, but even so you may be able to get some comforting news.
5. If you anticipate growth in your demand, is the shop capable of doing more volume? Do they have extra land or building space for growth? Again, ask the question if it’s important down the road.
6. Look at the shipping area. What is the probability of mistakes here as you examine the area. Is the paperwork to your liking, as well as packaging and labeling?
7. Always remember the potential supplier will also be evaluating you. Your needs will compete with others, so is your situation attractive to them?
All these things are reasons to visit your suppliers as soon as you can whenever possible. You can eliminate many of the problems cited in the article with a well planned and executed supplier visit.