Suppliers, their impact on supply chains, and how to choose them

21 September, 2022 Logistics supply chain optimization by industry

Suppliers represent a key part in the way supply chains work, they are partners in practice and operations, and at the same time, key players in achieving customer satisfaction, so choosing them correctly is vital for business, and the supply chains. 

Especially when we talk about direct supply chains, that is, those made up of a company, a supplier, and a client, involved in the different areas of the company, integrated both in the processes of products and services, such as finance and information, that is, connected to all levels of the chain

To evolve and optimize supply chains in general, the support and work of external suppliers is required, that is, those that provide raw materials, spare parts, devices, etc., directly affecting at the company's performance. 

And, on the other hand, if the suppliers are not aligned with the company's objectives, delays, stoppages in production, and of course, losses, may occur. 

For these reasons, the selection and performance monitoring of suppliers must be organized and carried out systematically, thus minimizing the risks associated with their part of the process. According to specialists in this field, supplier management is as relevant to the company as customer management. 

How to have the best suppliers 

The key to ensuring your suppliers meet your objectives is to constantly evaluate them. 

For this purpose, criteria, indicators, and key factors that are valuable and essential for the company must be defined, for example, the service costs, the speed of response, the quality of the products purchased, the degree of innovation, etc. Or even, from the administrative point of view, it may be important that they do not have any regulatory, legal or tax problems, that they meet certain certifications, etc.

Additionally, value-added services should be considered beyond competition, warranties, quality of after-sales service, speed, and safety. 

On the other hand, if they are already assigned, it is still advisable to periodically assess the risk level of current providers against external ones and determine if the current provider is a good business partner. 

The most common faults that have been detected from suppliers are the lack of a value proposition, the sales material, the lack of experience in certain materials, the shortage in the dimensional capacity of the machinery, the lack of quality management systems, the low indicators, the quoting times and not knowing the different types of business and customer loans. 

Logistics providers 

On the regard of logistics operators, it is possible to have one or more providers. Relying on multiple sources of supply can present the disadvantage of having different quality across deliveries, as these suppliers are responsible for ensuring if products, services and/or components meet the correct specifications. 

On the other hand, having only one source of supply also brings risks, such as dependence or little incentive for innovation. 

Finally, it is important to emphasize the need to create lasting relationships with suppliers that are aligned with the company's plans and ensure sustainability and continuous quality of the products or services offered, in pursuance of achieving a fully integrated supply chain. 

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