Compiled by Jonathan Katz A new study released by Best Practices LLC Chapel Hill, N.C., highlights the practices employed by leading companies to effectively manage their supply-chain relationships. "Best Practices in Supply Chain Partnership and Certification" draws upon secondary research and primary interviews with more than 150 companies including Dell, Lucent, and General Electric. Among the practices highlighted in the study:
- Using pareto analysis to focus attention on the top 3% of thousands of suppliers. Since suppliers typically make up 60% to 80% of production costs, this focus enables the company to make the most of cost-cutting efforts.
- Transferring many functions such as identification, selection, orders, invoicing, and payments to suppliers so that purchasing executives are able to spend more of their time building stronger relationships with partners.
- Maintaining several levels of certification, each with increasingly stringent quality measures. Certified suppliers benefit from reduced inspections, preferred procurement status, and increased visibility to other units. The results: significant improvements in yield, backlog, cycle time, material returns, and scrap.