Prime Advantage Blog

The Hurdles in Qualifying New Suppliers

Thyra Nelson on Jan 5, 2016 7:00:00 AM

The-Hurdles-Qualifying-New-SuppliersRaw materials are essential to making our products. Keeping your supply chain running smoothly to ensure the delivery of these raw materials is the focus of every procurement group. When you have a supplier that is struggling to keep up their end of the bargain, it is an arduous task to find their replacement.

First, if you don't already have a secondary supplier in place you then have to hold the hand of the current supplier to keep them performing until you qualify a replacement. Next, you have to set out to find a viable replacement, get engineering to sign off on their materials, audit their capabilities and performance, get them set up in your system, and finally get into their order pipeline. Depending on the material you are trying to replace, this could be a long process.

Locating a viable replacement is a big hurdle to overcome. Sometimes it is hard to assess a new supplier's overall capabilities when you are in a pinch. Are they a dependable partner? Do they have a great track record? How do other customers feel about their performance? These are sometimes non-quantifiable, gut calls that are easy to overlook, especially if you are having problems with your current supplier. Also, what is the right number of current customers to interview in order to find enough reliable answers? This process can be quite time consuming.

When you are having a supply issue it seems dire to make a transition sooner rather than later. If you are struggling with a raw materials supplier, the solution is not just to fill the slot. You need to do your due diligence and, if possible, take advantage of the situation to trial them amidst the shaky supply of your current supplier. The next step is to do a partial transition to the new supplier to see if they will work with you on all aspects of your production and operation needs. This will fill the gap of what may be currently burdening you and help you understand what adjustments need to be made to fully onboard the new supplier. Keeping both suppliers up and running is a process in itself, but it may be the least disruptive solution to your operation.

Smaller organizations have a resource limitation when it comes to working with underperforming suppliers or carefully qualifying a new supplier. Group purchasing organizations (GPOs) can lessen this burden when you are assessing new suppliers as well as be your advocate if there is a supplier issue. GPOs require a vetting process before the supplier is admitted to the group and they have a long Member roster that is happy to share the experiences they've had with a supplier. This additional security can help you ensure that your new supplier decision isn't all smoke and mirrors, as well as prevent you from ending up with the same issues that you are currently experiencing.

Avoid rushing to change when the going gets tough with a supplier. Making sure you find the right supplier partner is crucial when you are going through a raw material supplier modification. But don't forget, the transition process you select is equally as vital.

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Topics: Buying Groups and Group Purchasing Organizations, Supply Chain, Supplier and Member Best Practices

Thyra Nelson

Posted by Thyra Nelson

Thyra is the Marketing Manager for Prime Advantage, a Chicago based Group Purchasing Organization for mid-market manufacturers. She works with the group’s Endorsed Suppliers to share products and services with Members.

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