How do you manage your distributor-supplier relationship?
As a distributor, one of the most critical relationships you can have is with your supplier. The key to effective supply chain management is being able to track metrics and vendor performance to better evaluate your partners. This increases supply chain efficiency and creates a more valuable product for your end customers.
According to an article by Dave Blanchard of IndustryWeek, “In this current climate, with every expense and every decision requiring bottom-line justification, it sometimes can be difficult to determine exactly how effective these suppliers are to your operation.” Processes must be set in place to measure the critical factors that affect you, your suppliers, and your customers.
Some of the most important metrics that need to be measured on a consistent, reliable basis include everything related to your ability to optimize inventory levels while keeping customer service high. Other important metrics to track include:
- Consistency of vendor deliveries and fill rates
- Vendor responsiveness to marketing and technical support inquiries
- Product improvements
- Competitive pricing strategies
- High, qualified lead generationIt is important to alleviate risk within your supply chain as much as you can. It can be a challenge to properly plan and forecast possible issues that can occur. Here are 5 of the top risk strategies to implement as you work to improve your supply chain:
5 Risk Strategies for Improving Your Supply Chain Management
- Consolidate Suppliers – By consolidating what you purchase to as few suppliers as you can, you are mitigating risk by reducing inventory levels and avoiding duplicate SKUs which can cause issues in the long run.
- Think Big – There are aspects of risk management you may not have thought of to keep a consistent analysis of. These include “soft” factors related to marketing, technical support and pricing strategies. You also can’t forget about other possible supply chain partners like logistics providers whose metrics are also important to keep in mind as you work to improve your supply chain.
- Use a Smaller Number of Large Suppliers – By concentrating your purchases this way, you have a better change of increasing your support options and purchasing power.
- Anticipate Nontraditional Metric Responses – By this we mean, knowing and being prepared for how would you or your supplier react in an emergency situation. According to Bill Moore, senior VP of channel management for the SKF, the nontraditional metrics like response to catastrophe “should be judged with an especially sharp eye” to determine how a supplier reacts in an emergency. Some things you should focus on include: response time, how to get equipment running again, and another various processes involved in getting the facility active again.
- Use These Metrics to make and Validate Decisions – The whole reason you track and measure important business metrics is to make valuable decisions. With the right information about suppliers, you are able to make better decisions about buying direct in larger quantities, weather or not to use redistributor services, and decisions on pricing. Ask yourself if purchasing less critical products is going to make a big enough impact on your business
Using Technology to Support Your Supply Chain Initiatives
The right technology and software can be the difference between success and failure when it comes to implementing these initiatives. With the proper ERP system in place and the support of your software partner, you can implement and track the quality of your supplier and logistics relationships. BI (Business Intelligence) tools are also available to help you gather, view, and analyze reports related to inventory management and supplier performance.