When you procure parts from a third party vendor, you’re putting your company’s name on it before it goes out the door. In some instances, I mean this literally. Regardless, know that who you source your parts from impacts the final results your customers experience.
To put it simply, the parts you source become part of your brand. The attention to detail, quality, and consistency of your procured parts reflects upon your organization. When you outsource, you’re accepting another companies quality assurance as your own.
The key to coming out on top? Striking the ideal balance of relationship management and risk management with third party vendors.
THIRD PARTY VENDOR RELATIONSHIP MANAGEMENT
Follow these three steps to successfully manage vendor relationships and procure parts you’re proud to put your company’s name on.
1. ESTABLISH BUY-IN
This first step is definitely focused on relationship management. Establishing buy-in with a third party vendor means making sure they understand your needs, preferences, and expectations. But that’s not all. Understanding is one thing, executing is another.
2. EVALUATE RISK
At the juncture between production and procurement, you absorb a fair amount of risk with third party vendor relationships. By accepting their products, you’re also accepting their processes. The time between when your purchase order goes out and the parts come in, there’s a lot happening outside your control.
Long-standing partnerships are typically seen as being lower risk because you know what you’re going to get, but if you know you’re going to get a high rate of unuseable product, the risk remains.
3. AUDIT, MONITOR, AND ASSESS
Whether your current vendor relationship is five weeks or five years, pay attention! Keep track of turn times, variance, quality concerns, and communication gaps. Any of these can be the first sign of a relationship that’s not balanced.
As a purchasing agent, the relationships you build with third party vendors form the foundation of your company’s final product. When you and your vendors settle into your working relationship, make sure it’s one with mutual benefit. As always, engineer a relationship built upon service, trust, and value.