How can Fitter Snacker improve its relationships with its suppliers of raw materials?

Answer 1

Understand the cost and value of the entire supply chain. Without a thorough understanding of all costs, from raw materials through the end product or service, and the value provided by each supplier in the process, a supplier cannot be evaluated.

Realize that supplier strategies go two ways. Most companies focus on what suppliers can do for them rather than on what they can do with the supplier to lower costs. A true partnership leverages the total production cost to both parties' advantage.

Accept accountability. Companies should plan sufficiently in order to request orders from suppliers with acceptable lead time and without multiple changes. If every order requires emergency handling, the relationship will never work.

Incorporate appropriate service levels and metrics into agreements. A relationship based on a handshake is far more likely to encounter problems than one in which expectations are clearly established and agreed upon.

Spend equal time aligning incentives and penalties. It is natural to worry about the worst case, such as if a shipment is not received and a plant grinds to a halt. Conversely, the extra value created when production and asset utilization is optimized should be the basis of improving the value proposition for both parties.