Is your supplier selection process a source of competitive DISadvantage? A white paper from Spend Matters considers the pre-qualification process as a key element for procurement. This is one of several articles, discussions and even websites that deal with the difficulties with the buyer-supplier relationship. We believe the pre-qualification process can be an opportunity for addressing, maybe even solving, some of the issues we have addressed in prior newsletters.
The more your requirements include unusual features the more some pre-qualification process might be useful. Such a process, and perhaps even a questionnaire, can have the benefit of gathering information more easily than what might occur with a RFQ, when real business is at stake and attention is narrowly focused on RFQ details. If contact with a potential supplier occurs first with an RFQ, the timing may be wrong, and the supplier chooses not to compete. In the absence of other information, this could mean an important relationship never develops, and both sides are the poorer.
So if the pre-qualification process seems appropriate, and if you will be seeking suppliers for custom manufactured parts, then we recommend you prioritize the information you will be asking. Almost all the companies we deal with have limited resources to apply to information requests. This suggests your process include some idea of the long term business your situation eventually represents.
Proficient Sourcing helps buyers find appropriate suppliers for custom manufacturing, so this subject is vital for us as well as for buyers. In previous newsletters we have identified several factors that increase the difficulty of finding a really good supplier. Since we have a big stake in helping develop long term relationships, we would be very happy to assist with a pre-qualification effort. The information included also helps us define appropriate candidates for your consideration.
Topics to consider in a pre-qualification process:
1. Is the anticipated type of work a strength of the supplier candidate? This might refer to equipment capabilities, dimensional limits, surface condition and volumes that can be outlined without disclosing sensitive data. A concern about revealing specific information might lead to a multiple choice, or check box, format, whereby the prospective supplier can indicate a range. For example you might ask, via a series of check boxes, what capacity the company has for parts of a particular definition. The point here is to examine the company’s ability to handle your longer term needs, not just some introductory quantity. Another thought would be to ask what the company’s position might be if new equipment is needed to provide adequate capacity.
2. Delivery requirements, again in general terms, can reveal supplier limitations that might not appear in a specific RFQ. You might pose a hypothetical question that asks how a company deals with prioritizing. We would expect a truthful response to indicate the potential supplier deals with primary customers differently than new or lesser customers. After all, most successful companies prioritize their customers. If you are a new prospective customer, your value is in the future, and probably not immediate. Initial work is likely to be attention consuming. If you become a primary customer of some supplier, wouldn’t you expect, and perhaps even demand, priority treatment?
3. Is the potential supplier open to inventorying product, and if so, what limitations might exist? Do they have sufficient space and security for you? Is there potential for assembly with or without inventorying? Another issue could be the company’s access to needed secondary operations, such as plating, anodizing, or painting.
4. If your need involves special materials, you may be able to buy material at a better price than a small job shop. If this could be the case, you might explore whether the potential supplier is open to you supplying material as an option in future RFQ’s.
The point of all this is to prepare for some future need with a supplier research program in advance. Naturally, a lengthy and involved process could discourage prospects from responding, so this requires considerable forethought. Proficient Sourcing would be delighted to assist in such an effort, and we would certainly appreciate your input via our blog.