Are Suppliers our friend or enemy?
Dennis AuBuchon
July 26, 2010
This is an interesting topic and one which businesses must control to have a viable business relationship with their customers. Suppliers can be both a friend and an enemy. The key is whether they are being compliant to the requirements handed down through contractual agreements. A supplier who is not compliant with the terms in a contract they have signed is in effect an enemy. The reason for this statement is clear but I will elaborate on it.
Companies sign contracts to furnish products or services to their customers and in return they have a commitment to furnish the products or services that are in agreement with the requirements. Many times especially in large companies and sometimes in smaller companies they are dependent upon the product or service involved they need the assistance of suppliers or vendors as some companies call them. These suppliers or vendors many times have the capabilities or resources that a larger company does not possess.
Today there are many complex products on the market that consumers want or need and it is difficult for a company to possess all the resources or expertise to manufacture or produce all the elements involved. Suppliers are the lifeblood of many companies and they can greatly impact the bottom line of larger companies with which they have contractual agreements. The details of how they impact other companies is explained in the subsequent paragraphs
First and foremost suppliers are an inherent part of society today and when product recalls are issued many times but not all the time suppliers may be involved. When companies have product recalls such as the ones recently in the news the bottom line is impacted as products must be pulled and the cost impact can be huge dependent upon the product involved. Suppliers who are at the heart of the problem in these instances impact the profitability of those to which they furnished integral products included in and end item.
Another instance where suppliers impact the bottom line involves shipping products that do not conform to the established requirements in the contractual agreements. These do not necessarily end up in product recall situations but when products do not meet the requirements and are discovered at the prime it cost them money. Nonconforming products must when discovered must be investigated and decisions made about the usability of the products furnished. Companies must have a system in place to validate products or services meet requirements in all contractual agreements. The cost associated with addressing these discrepant products increases as more issues with supplier products or services increases.
In terms of suppliers being a friend of which many I feel are they assure their operations meet the contractual requirements for which they signed an agreement. The more suppliers provide quality products that comply with their contractual agreements the more they are a friend to their customers. Another aspect of suppliers being a friend is when they develop a reputation for a quality product or service and when used by a prime contractor (supplier of an end item) they add a positive perception of the type of products a prime contractor provides. Having a supplier with a good reputation also increases the possibility of more contractual agreements based on the quality reputation of the suppliers they utilize in producing a product.
One specific point to make is that while there are some suppliers who may not always meet their contractual commitments there are many who do and take their commitments seriously. Those that take their commitments seriously are the ones that prime contractors must make the effort to utilize. As previously mentioned suppliers to major companies are an integral part of society and the way it operates. The complexity of products and requirements available today make it necessary for companies to utilize the resources of suppliers in committing to furnishing an end product to their customers. Many times the expense of maintaining a complete system to meet all the contractual requirements of complex products outweighs the cost of utilizing suppliers. It is often cheaper to utilize suppliers in certain instances as they already have a system in place. In effect a supplier often can produce an element of a product cheaper than a prime creating a system to handle all product requirements.
Another point to make is that as consumers the products we purchase are from suppliers who produce or manufacture them. They can be our friend or enemy dependent upon the quality of the product they produce. If a product we purchase meets the advertised requirements or expectations these suppliers will be our friend. However, if a product we purchase does not meet the advertised products or our expectations a supplier can be our enemy. The supplier of the products we purchase who meets the conditions in the previous sentence would be an enemy in costing us time. The cost would amount to the effort it takes to take back a product, get a refund or get a replacement.
Companies sign contracts to furnish products or services to their customers and in return they have a commitment to furnish the products or services that are in agreement with the requirements. Many times especially in large companies and sometimes in smaller companies they are dependent upon the product or service involved they need the assistance of suppliers or vendors as some companies call them. These suppliers or vendors many times have the capabilities or resources that a larger company does not possess.
Today there are many complex products on the market that consumers want or need and it is difficult for a company to possess all the resources or expertise to manufacture or produce all the elements involved. Suppliers are the lifeblood of many companies and they can greatly impact the bottom line of larger companies with which they have contractual agreements. The details of how they impact other companies is explained in the subsequent paragraphs
First and foremost suppliers are an inherent part of society today and when product recalls are issued many times but not all the time suppliers may be involved. When companies have product recalls such as the ones recently in the news the bottom line is impacted as products must be pulled and the cost impact can be huge dependent upon the product involved. Suppliers who are at the heart of the problem in these instances impact the profitability of those to which they furnished integral products included in and end item.
Another instance where suppliers impact the bottom line involves shipping products that do not conform to the established requirements in the contractual agreements. These do not necessarily end up in product recall situations but when products do not meet the requirements and are discovered at the prime it cost them money. Nonconforming products must when discovered must be investigated and decisions made about the usability of the products furnished. Companies must have a system in place to validate products or services meet requirements in all contractual agreements. The cost associated with addressing these discrepant products increases as more issues with supplier products or services increases.
In terms of suppliers being a friend of which many I feel are they assure their operations meet the contractual requirements for which they signed an agreement. The more suppliers provide quality products that comply with their contractual agreements the more they are a friend to their customers. Another aspect of suppliers being a friend is when they develop a reputation for a quality product or service and when used by a prime contractor (supplier of an end item) they add a positive perception of the type of products a prime contractor provides. Having a supplier with a good reputation also increases the possibility of more contractual agreements based on the quality reputation of the suppliers they utilize in producing a product.
One specific point to make is that while there are some suppliers who may not always meet their contractual commitments there are many who do and take their commitments seriously. Those that take their commitments seriously are the ones that prime contractors must make the effort to utilize. As previously mentioned suppliers to major companies are an integral part of society and the way it operates. The complexity of products and requirements available today make it necessary for companies to utilize the resources of suppliers in committing to furnishing an end product to their customers. Many times the expense of maintaining a complete system to meet all the contractual requirements of complex products outweighs the cost of utilizing suppliers. It is often cheaper to utilize suppliers in certain instances as they already have a system in place. In effect a supplier often can produce an element of a product cheaper than a prime creating a system to handle all product requirements.
Another point to make is that as consumers the products we purchase are from suppliers who produce or manufacture them. They can be our friend or enemy dependent upon the quality of the product they produce. If a product we purchase meets the advertised requirements or expectations these suppliers will be our friend. However, if a product we purchase does not meet the advertised products or our expectations a supplier can be our enemy. The supplier of the products we purchase who meets the conditions in the previous sentence would be an enemy in costing us time. The cost would amount to the effort it takes to take back a product, get a refund or get a replacement.
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