In the world of business, there lies a lot of challenges. The success of each business largely depends on overcoming the challenges and efficiently making use of the available resources to achieve the objectives of the business. Some of these challenges come in the form of the partners such as suppliers the business transacts with. A smooth flow of products and services has to be maintained by all the players. A breach of this agreement brings to a business many losses to the customers and a decline in the sales revenue. Other drawbacks include; poor quality of goods and services from the company and increased operational costs. Many policies have been suggested to improve the supplier performance to mitigate such losses and further problems ( Schuh et. al, 2014).
Before the actual improvement plan is laid out, four main areas in an organization are given more emphasis. These include; the strategy, people, technological advancements, and manufacturing processes. The strategy is crucial as it defines the organizational objectives while aligning them with the vision and mission of the company. People or the staff are the main players in the plan because they convert the strategy formulated into actual actions. The technology and the processes of production also affect largely, the quality of products ( Schuh et. al, 2014).
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The processes used to improve supplier performance are based on a particular set target as well performance measuring indices. A scorecard is set to first determine the performance expectations from the supplier. The scorecard can then be used to establish other areas to focus more on so as to improve the performance of suppliers. In this case, uncovering hidden costs, discovering the addition of value to the business from the suppliers or customers. By reducing the supplier costs, for instance, the profit margin of both the business and supplier would be raised ( Bernstein, 2016).
After the scorecards have been set, it is also important to communicate the expected results to the supplier. The supplier should be notified immediately of the current issue the customers are going through. By use of the key performance indicators and other performance metrics, the performance of the supplier will have a statistical record to crosscheck it with ( Sinha, 2017). The scorecard should be well aligned with the business objectives and long term goals. Many technological platforms make it is faster to relay information easily.
More focus should be put on the processes that would eventually improve supplier performance. For instance, rewarding the supplier of nails with an incentive would motivate the supplier to keep performance higher. Awarding the contract to supply nails to another business, would mitigate the effects the first supplier brings to the company. It would be therefore advisable to move to the supplier who supplies the nails on time and continue working with them. Eventually, it would be reasonable to undercut the supply of the current business if no improvements are forthcoming ( Sinha, 2017).
All the information, including the scorecards and vital statistical findings, should be shared internally within the company. Stakeholders and other managerial employees should be aware of the current difficulties the company is going through. Financial managers, for instance, are best placed to advise on the best course of action to take in this case. Any other stakeholder with a decisive influence should also be made aware of the predicament ( Bernstein, 2016).
It would be futile to put all these mechanisms in place without knowing the root course of it all. Methodologies and root cause identifiers should be established. Constant communication with the suppliers is also important. Root Course Analysis is a method that is implemented to identify the origin of non-compliant suppliers. Strategies are also implemented to eliminate the source of these problems, prevent the problem from recurring or mitigate the effects brought about by the company. Root Course Analysis is simply a cycle made of well-defined steps which are, identifying the problem, describing the problem, understanding the problem, identifying the root course, implementing corrective action and monitoring the system. The main problem, in this case, is the packaging of the nails and the shortage of nails in some of the packages. Short term strategies that solve the effects are not effective because they don't guarantee the problem will not occur again. The effects of a problem are only dealt with for a short time, and after that, the recurrent problem will happen again. Identifying the root course guarantees that the problem does not occur. This also saves valuable working hours and money ( Bernstein, 2016).
Customer complaints are a good source of information vital to identifying the root course of the problems. Additional customer surveys and questionnaires can also be used to acquire substantial data. Corrective measures ensure that the effects are not propagated further into the processes of the business. Temporary and swift countermeasures do not eliminate the root course of any problem, but it helps in mitigating the effects. These are known as the containment processes. The counter measures also create a suitable environment and time to deal appropriately with the long term effects. After systems have been aligned, preventive measures should also be put in place. Preventive measures are different from corrective actions. Preventive measures are proactive, and they are majorly focused on a closely related potential problem in the future ( Schuh et. al, 2014).
The business-supplier relationship is deemed to continue as long as the business is in operation. Compliance measurements should be put in place to ensure that all the corrective measurements, whether long term or short term are being adhered to and honored. Compliance methods also help to identify more areas of improvement. Areas of weaknesses coming internally from the business should also be identified and solved. It might go unnoticed for a long time, but it is also worth noting that the chain of supply can also be affected by internal factors within the company. Hiring qualified and honest staff, such as procurement managers, is one sure way of overcoming this problem. The procurement process and responsibilities involved there in require individuals with high levels of moral accountability and integrity ( Schuh et. al, 2014).
In conclusion, keeping a business in successful operation is a complicated task that requires the harmonization of many systems and people. Identifying such areas and solving these problems effectively ensures the continued growth of the business. Producing high-quality products to the customer should be one of the areas that the business should focus on. It, therefore, goes without saying that, any complaints from them should be handled with diligence.
Bernstein, J. (2016). The 10 Steps of Crisis Communications. Retrieved from https://www.bernsteincrisismanagement.com/the-10-steps-of-crisis-communications/
Schuh, C., Strohmer, M., Easton, S., Hales, M., & Triplat, A. (2014). Supplier relationship management . Berkeley, CA: Apress.
Sinha, S . (2017). Managing supplier compliance risks: the way forward . Retrieved from http://www.continuitycentral.com/index.php/news/erm-news/479-managing-supplier-compliance-risks-the-way-forward