Supply Chain Secrets #12: Three Things to Stop Doing Today

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Stop Telling Suppliers They’re Partners
At best this is meaningless business speak best avoided, at worst it’s a green light to allow your material costs to rise. Partnership is like respect; it’s something you achieve over time. It’s not a label; it’s a way of acting. Forget about calling suppliers partners; instead make sure you have two or three qualified suppliers for the same commodity. Let them know they are part of a select group of suppliers who will have the opportunity to bid on new contracts.  Their success with your company will depend on their competitiveness, supply chain innovation and communication. Healthy sustained competition is your best path to creating business partners.

Stop Cutting Purchase Orders
Purchase orders are waste of time and money. Every time you cut one, say to yourself “How can I stop doing this?” Cutting down on the number of purchase orders involves setting up automatic replenishment programs, supplier portals, blanket orders with simple electronic releases, the use of p-cards, and creativity. Too often we feel comforted by the stacks of paperwork on our desk, despite our claims to the contrary. Stop complaining and start eliminating. These efforts take time and require agreements to get hammered out with accounting and IT. It may take awhile, but the benefits are well worth it.

Stop Chasing Variances
Accounting lives for variances. Given the opportunity, they will have manufacturing and purchasing people spending countless hours running down variances. Fight back, they will not go down easily, but it’s a battle worth winning. Use that same energy to validate actual build times and review part costs. These activities will have a more dramatic impact on your business then spending hours each month chasing down variances tied to standards that are often incorrect.

About ThreeCore

Tom Petersen is the Managing Partner of ThreeCore, an operational consulting firm in Beverly, Massachusetts.  Tom provides strategic consulting services for high tech manufacturers.  His team is dedicated to helping companies create competitive advantages using innovative strategies and process-driven improvement. For more information go to www.threecore.comor follow Tom on twitter @3CoreConsulting.