You have hundreds of suppliers.
Just looking at the list numbs your brain.
It’s a jumbled mess that has very little meaning.
It tells you nothing about how your partners are delivering on their promises. It tells you nothing about why you’re working with someone over others. It gives you very little strategic insight.
The only good that you get from it is… You can mass email RFQs.
Whether your supplier is an OEM (notorious for bad ratings) and MRO or an aftermarket material lessors and distributors, evaluating and rating your supplier base is a smart practice.
Long term, it’ll reduce your material costs, increase your on-time delivery and avoid unnecessary stress.
1. Establish Performance Indicators
How do you know if your supplier is doing good? Indicators.
Create specific performance criteria for tracking and evaluating your suppliers on a regular basis—monthly, quarterly, and/or annually.
If you want to get real crazy, even weekly if their volume is high.
You don’t have to make this an overly bureaucratic process. Start small and evaluate them on the things that matter most.
Here’s some indicators we use here at Skylink:
- Easy to communicate with
- On time shipments
- Quality of material
- Quality of documentation
- Service level
2. Devise an Evaluation and Review Method
There’s hundreds of ways to evaluate your supplier.
- Evaluation forms
- Software applications
You get it. They all do the trick.
Regardless of what you use, your evaluations should start when you begin purchasing and last throughout the vendor relationship.
And make sure you let them know how you’ll be evaluating them from the start.
When you or your team go to review your partners, you should know how many corrective actions you had to take, what issues occurred, how many warranty claims you had to submit and anything else that’s pertinent to your operations.
The goal is to ensure your performance indicators are being met.
Being proactive is a much better strategy than being reactive and evaluating your suppliers is a great start.
3. Who’s calling the shots
Once you establish your review process, you’ll need to determine who in your company is responsible for reviewing the data.
Is it you? Your manager? The QA department?
Whoever it is, they must be in complete alignment with your purchasing team. Otherwise, things will get sloppy. Nobody knows your vendors better than you. So ideally, you should do the evaluating.
If you find you don’t have enough resources to dedicate to evaluations, leave it to a team of people.
Rotate the responsibility.
Just always make sure that the training of your review procedure stays consistent with whoever does the evaluating. The idea isn’t to create bigger messes for you to clean up.
4. Maintain Good Relationships
Your suppliers are a critical component to your operations success.
They're apart of your team. Make sure you’re treating them that way.
Give them a call. Know them as a human. Get away from just the routine back and forth email.
And most importantly, make sure it's a win/win relationship.
Just as you need them to run your operations, they want to need you as well.
Make it's worth the time and effort for both sides.
5. How to Report Red Flags
As you begin to monitor your suppliers performance, you'll need to decide when to praise them and when to report a formal issue.
And let's be realistic. This is aviation, issues pop up all day long, but you'll need to establish what tolerance levels you can accept.
When an issue occurs, bring out your data and report how it effected your operation, determine if it was in fact an issue they created.
This process is not just about reviewing your suppliers but helping them to improve their performance.
After all, if they get better than so do you.
6. Have Routine Meetings
If you’re working with a top supplier, you should hold, at a minimum, bi-annual review meetings.
In these meeting you can discuss performance and your projects for the next 6 months.
It’s very important that you and your top suppliers stay in line with one another.
They’re the ones who will help you reach your operational goals.
Meet with them and plan for the future.
7. Cut Loose Weak Links
Do you want the cold hard truth? If you can’t rely on someone, you should cut ties with them.
You don’t want to work with mediocre services. Your operation is too important.
The goal isn’t to turn over one supplier after another. It shouldn’t happen often.
If you establish performance indicators, communicate your goals, hold routine review meetings, and clearly communicate with your suppliers, you will begin to see a huge boost in productivity.
Do you have a supplier evaluation process? Do you have issues or tips to share? Comment below.