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Most Common Ways Suppliers Break Customer Trust
THE SOURCE CODE BLOG
Whether new to sourcing or an experienced veteran, there’s a lot to focus on in order to ensure the products you need are ordered correctly and delivered on time. While it’s easy to center your attention in the details of product specifications, production planning and logistics requirements. You must not lose sight of the other elements which can just as easily derail your sourcing venture.
Saying “Yes They Can” when they really mean “No They Can’t/Won’t.”
- Nothing is more frustrating than going down the development path only to find out the supplier has no ability (or worse) willingness to consistently meet your desired quality demands. Delivered through an assortment of delay tactics, like “we’re buying new equipment” or “we’re hiring an expert who will handle this” or “constant over optimism that they’re working on it and they’re close to getting it right.” The facts remain if incremental improvements are not seen they’ll likely never reach the consistent quality you require.
Random Price Increases – Done through a variety of ways but the most common are:
- Supplier quotes a price then once the PO is submitted, raises the cost. Usually sighting “unforeseen” production issues or higher input material costs as the reasoning.
- Slight product adjustments result in major price hikes. When switching product requirements, specifications or input materials price increases are warranted. However minor adjustments in formulation tweaking or packaging should not result in the price soaring through the roof.
- Price increases from order to order. The supplier will most likely state a rise in raw material costs, labor increases and exchange rates as the cause. From time to time this maybe the case (like once a year at most) but not every other order.
- Either through late product deliveries, consistent production issues, communication errors or countless other problems these suppliers never seem to get a grasp of what it requires to successfully supply a North American company. All told if improvements are not seen once you have raised the issue, it shows a lack of respect for you and the business you’ve brought them.
- You should be able to have an open and honest discussion with your supplier about your collective business. If the supplier is unwilling to do so or purposely withholds important information and will not communicate potential problems. Exit the relationship/contract immediately. Situations like this are not worth your time, money or energy.
It should be noted the problems experienced above, typically originate because the person or organization sourcing has not taken the proper time to establish a mutually beneficial relationship.
Especially in a communist country like China where trust in their government in low but trust in their fellow man is very high. When you take the time to explain your goals and how they will help the supplier, you have a much better chance of cultivating a successful supply chain where trust and communication are used as pillars for collective growth and profitability.
That’s it for today. Stay tuned for the next weeks post.