Walking into Walls

Jan. 12, 2008
Learn to overcome these five obstacles to building a reliable supplier network.

Small and midsized manufacturers are frequently challenged with finding reliable and qualified suppliers within limited networks. "U.S. manufacturers are being challenged in the most intense global competition in history and can only squeeze their suppliers so much," observes Mike McDonald, director, member recruitment with buying consortium Prime Advantage.

One way to compete is to join an industry association or buying group, which can provide insight into which suppliers your peers use. McDonald offers the following perspective on five key issues that small and midsized manufacturers regularly face when trying to build a reliable supplier network, as well as some suggestions on how to find reliable connections.

1. Limited resources (staff and time constraints) to effectively manage a complex supplier base.

A middleman with industry expertise can serve as a sourcing resource for companies. Different from typical brokers who are limited to a small network of suppliers, these middlemen can help ensure that top suppliers are at your disposal in core product categories as well as indirect goods and services.

2. Supplier identification: Limited exposure to national and global supply chains.

Even small manufacturers now feel the impact of the global economy, and this sometimes means a need to open your supply base. Members of an association or buying group have exposure to a network's elite supply base through conferences and other events. A middleman from the group with industry expertise can also facilitate key buyer-seller relationships throughout the year.

3. Limited supplier qualification and auditing process.

Some buying groups offer a qualification and audit process, which will ensure that only top-tier quality suppliers enter and stay in your supply network, both domestic as well as global suppliers.

4. Limited negotiating power for pricing and overall clout.

A buying group has the volume of the entire member base to negotiate aggressive rebate and discount programs within its supplier network. A high amount of savings in aggregate purchasing clout ensures members are reducing their costs in strategic purchased items as well as indirect goods and services.

5. Inability to "build a bench" of suppliers across categories.

A buying group allows you to submit your supplier list to high standards through a continuous audit and evaluation process, even if you choose not to use the suppliers affiliated with the group. Including multiple suppliers per category in a supplier network enables organizations to have a deep bench across their purchasing needs.

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