The customer-supplier relationship has undergone a number of changes in recent years, especially driven by the strong level of innovation sweeping through industry...
October 25, 2021 . 2min read
Procurement divisions are responsible for fulfilling a company's purchasing needs while complying with a set of specifications that obviously includes a number of technical requirements, but also quality and cost criteria. The upheaval and uncertainties sweeping through the economic landscape and the geopolitical arena have hammered home the importance of injecting even greater security into the supply chain. Therefore, choosing the right partners is key to ensuring reliable supplies.
Procurement divisions may have the final say when it comes to selecting partners, but they make a point of consulting with the organization's other stakeholders to ensure that their decision reflects all the identified needs and requirements.
Maintain a sharp competitive edge
When looking for partners in highly technical industries, such as the infrared sector, companies will focus on suppliers possessing the ability to innovate in their chosen field with the aim of creating synergies to break new ground together. Innovation should enable both parties to achieve differentiation in the market and increase their competitive advantage.
The company can only fulfil this expectation by building a long-term relationship with its partners.
A secure supply chain and controlled costs
An effective procurement division also plays an important role in preventing outages from disrupting the production chain. Selecting reliable and committed partners is essential for keeping production processes running and thereby growing your business and retaining your customers.
That explains why you should choose your suppliers and partners according to a specific list of selection criteria vetted by several of your company's business functions. This is actually the method that we use at LYNRED:
- Technical capacity: this criterion measures the supplier's technical ability to drive your development strategy, whether by offering a collaborative development approach, leading a strong innovation strategy or providing cutting-edge technical equipment capable of achieving industrial excellence.
- Quality: this criterion measures the supplier's self-imposed quality performance objectives, such as complying with quality standards, implementing a certified quality management system, striving for zero defects, or pursuing a development strategy with validation processes at each stage.
- Speed of response: this criterion measures the level of communication and relations with its customers, i.e. good customer support, the possibility of exchanging product samples, the capacity for flexibility and the ability to accommodate market constraints.
- Time: this criterion gauges the supplier's delivery time performance, including the OTD rate (On Time Delivery) and delivery capabilities.
- Cost: this criterion measures the supplier's economic performance through its ability to offer relevant cost reductions throughout the partnership.
- Environment & Ethics: this criterion measures the supplier's commitment to society and the environment, meaning the initiatives that it champions to best comply with environmental standards and improve working conditions for its employees.
Access to a partner that understands and shares your constraints
Your supplier's procurement division needs to gain a clear insight into your constraints and share the requirements imposed by your end customers with the aim of delivering products that satisfy those constraints. For example, the procurement division at LYNRED, the French expert in manufacturing infrared sensors, is intimately familiar with the export constraints associated with end customers.
The procurement division plays one of the primary roles in the company by ensuring compliance with all the required criteria (cost, quality, time, etc.) and strengthening supplier and partner intimacy, which means being actively involved in all the company's areas of activity. LYNRED's procurement division is represented by a specialized team for each purchasing category, which drives our ability to satisfy all the needs and constraints facing our different departments and also our end customers. In addition, LYNRED's procurement division includes an integrated team for raising supplier performance.
The decision to work with a robust supplier should also be motivated by that supplier's ability to effectively select its own partners and keep tabs on their performance. A production chain is forged from several different links, so it is vitally important to make sure that every single link is dependable and just as capable as your organization at meeting both your own needs and your end customers' requirements.
That explains why your own procurement division and your supplier's procurement function are so mission-critical and also why they should be kept under close watch.