Here’s how to know when to fire a vendor – even if they’ve been an extension of your team for a long time.
Whoever said business isn’t personal never lost a job, promotion, client, or customer. It is personal. That’s because business involves people who are in a relationship, albeit professional. While it’s possible to genuinely like someone you’ve done business with, sometimes, the risks of doing business with those you like outweigh the rewards.
Even the most likeable – and long-term – suppliers can disappoint. Unfortunately, less-than-stellar supplier performance is far more common than it should be. Yet because firing a vendor, is not fun, many organizations avoid it. They opt, instead, to stick with the status quo, even if things are below par.
But keeping a supplier that’s no longer a good fit for your organization can cost you far more than a few hard feelings – it can cost literally hundreds or thousands of dollars, not to mention an untold amount of time and trouble.
That’s why it’s crucial to continually monitor supplier performance and look for the early warning signals so you can intervene sooner rather than later.
Here’s how a leading, heavy-truck OEM who faced this issue dealt with it with respect to a major Tier 1 supplier that fell short on product quality and lead time. (P.S. These same key indicators are for you to consider, too.)
1.) Their work doesn’t reflect your high standards.
Quality is quality and there’s no getting around it. Of course, there are acceptable tolerances. But out-and-out rejection due to quality issues? That is a definite problem; especially when it comes to die casting. In the case of the heavy-truck OEM, their old supplier was putting out castings that had uncontrolled porosity issues. Porosity is a measure of the spacing between the material sediments. It creates tiny holes throughout the material that do not conform to specifications.
Though a certain amount of porosity is inherent in the die-casting process, die casting manufacturers can – and should – minimize porosity to deliver parts that are well within your specs. Bottom line? Refuse to accept mediocre results.
At MES, our die casting methodology allowed us to produce a higher quality aluminum elbow casting (which connects a turbo hose assembly on heavy trucks) for the OEM. And, unlike their former supplier, MES die castings met or exceeded the OEM’s standards for durability, dimensional stability, and tolerances.
2.) They fail to deliver on time.
It’s easy to take the quoted lead time from your supplier at face value, no questions asked. But don’t. Ask questions until you understand what their standard lead times are. Be mindful of slipped, pushed, and increasingly longer lead times. Instead, hold your supplier accountable.
As a baseline, it can help to know what average lead times are. For example, “good” lead time from a domestic manufacturer is under 3-4 weeks, whereas “poor” lead time is typically 6+weeks.
This OEM’s Tier 1 supplier was clearly on the “poor” lead time spectrum. Then MES stepped in. In addition to delivering the requested parts within a good lead time, we’ve stocked their castings in our own warehouse, Metrics Works, shortening lead time to a very fast 2 days.
