Holistic Supplier Performance Assessment

Have you ever watched a dog that has a flea on its tail? The dog looks at the data available to him. He turns and sees the end of its tail that is giving him some trouble. The dog then proceeds to chase the tail, spinning round and round, nipping at the tip of the tail. If the dog is lucky, the flip of the tail matches its nip and he bites and tugs the end of his tail. Now, does that exercise actually solve the dog’s itchy tail flea problem, or did this just fulfill a futile adventure, the accomplishment of actually catching its tail?

In the same vein, companies need to be careful that their supplier performance metrics provide them with a holistic picture of their suppliers' performance. Using numerically measured, or hard numbers to be the sole barometer used to gauge supplier performance may not provide an accurate assessment of the supplier’s actual performance. Also, using the numerical data as the sole barometer to locate and identify packaging quality problems may result in that same dog chasing tail outcome as the data tends to point to the outer most stratosphere of the problem, the symptoms, and not the real root cause(s) to the problem. 

A discovery made while managing my numeric metric supplier performance monitoring program, was the need for both hard and soft data. Hard, or the standard numerical metrics (e.g. Defective Material Report (DMR) $’s, repeat defects, % on time delivery, etc.) tended to do two things: first, identified the essence of trouble/issues/hot spots, and second, tended to identify the large dollar low hanging fruit events. My assumption made was, when all the plants’ hard metric numbers were up, they should be satisfied with their suppliers’ performance, right? Surprisingly, that was not the case.

Digging into the conundrum, a quarterly quality and service survey dialogue was created with the plants to gain more information on why metric numbers could be high and satisfaction of supplier performance low. The results of these surveys were surprising and raised two major opportunities going forward. 

1.     There were other problems not reported in the DMR program. Plants were being bogged down by low quantity, low $/lot issues that seemed to occur with every lot or pallet load. Each individual instance was not enough to report (under the radar), but strung together, was causing havoc in the plant.

2.     Even the big stuff was not being resolved. Plants were not packaging experts and were having difficulty communicating effectively with their suppliers to describe what their problem was and what it looked like. Also, on occasions, the problems they were attributing to the supplier was in fact caused by something within our plant/handling system and not the supplier’s fault at all.

The soft metric, or the quarterly satisfaction survey, proved to be the missing link. With the two programs, hard and soft performance metrics, combined, they proved to be an effective method to accurately assess supplier performance and was an effective method to nip problems early to prevent big flare up incidents.

Now, that being said, soft side metric programs will be different from company to company. My survey process worked well for a multi plant, multiple product, national supplier package system. Different types of systems must be customized to fit other specific production set ups. For example, my survey system, established to monitor the performance at 18 plants, may not be as effective in a company running a single plant operation.

The moral of this article is, don’t fall in love with the numbers. Numeric metrics are not the end all. They start you at the beginning of the journey of assessing supplier performance and problem resolutions. I found that combining the hard and soft metrics saved a lot of time and money. Providing suppliers with objective and accurate feedback made my suppliers better suppliers. Having a firm finger on the pulse of my packaging production effort made problem solving faster and used fewer resources as well. My plants satisfaction with their suppliers went up by 40% (I could not even give you a figure before adding the soft side metrics). My plants’ production line efficiency also hit new highs. Don’t settle with half the picture. Be bold, be creative and add the soft side to really make your supplier performance program percolate.