Being too picky is rarely seen as a good quality, but in manufacturing there's no way around it. Carefully selecting just the right site for a new factory or which new product market to explore are critical decisions and can't be made without doing all the necessary homework. So it stands to reason that picking a new supplier would fall under the same scrutiny.
However, as many manufacturers would probably admit, it's only recently that they have given those decisions the detailed attention they deserve. According to Paul Griffin, director of global sourcing and retail information services for Avery Dennison, selecting quality suppliers has always been important for the company, which manufactures print and fabric labels and a variety of office supplies.
For years it has juggled multiple sources around the world to secure a steady supply of paper stock, pressure sensitive materials, resins, yarns, liquid inks and printer parts. But as the global marketplace has changed, Griffin admits that Avery Dennison's screening process also has had to adapt in order to make sure that new suppliers can continue to guarantee consistent, quality products.
The approach has also involved developing a strict set of environmental and social compliance guidelinesinvolving labor laws and health and safety standardsthat suppliers now need to prove they can follow before getting to the next round of discussions.
"A few years ago, many companies focused solely on trying to find the lowest-cost supplier that provided the quality and service that met their requirements," says Griffin. "Now all of those things can be in place, but if they don't conform to those [compliance] guidelines, it's the end of the conversation. We decided that if they don't have the ability or the desire to adjust, we'll find someone else. We've even had to drop a few suppliers as a result. So it's been a big change."
Once suppliers are found to satisfy Avery Dennison's compliance requirements, the process continues with a face-to-face meeting. This exchange, Griffin says, is the first step to allowing his team to understand the scale of the supplier's business, what markets they are involved in and, if possible, their profitability and long-term business solvency. In addition, they look for service and quality metrics. Are they measuring themselves? And on a plant tour, is that readily visible?
Of course, some suppliers just aren't built that way. Griffin says he has encountered Chinese suppliers who are totally unwilling to share certain information -- even that which would be seen as fairly harmless for most U.S. manufacturers.
"It has even been something very simple, but for whatever reason they just don't want to tell you," Griffin explains. "For a supplier to be that blunt in that respect and not give an explanation, it's definitely a warning sign. At that point, at least as far as I'm concerned, that will be the end of the meeting and the end of the opportunity for the supplier."
Gaining insights into the supplier's own supply base can also prove beneficial, according to Griffin. For Avery Dennison, this provides a better understanding of whether the components its suppliers are using will be repeatable.
"We don't want them buying from a company that we know is always spot buying a raw material on the open market. That doesn't help consistency," Griffin says. "And if we understand their cost structure, we might find out we have relationships in that second tier that we can leverage and help a supplier get better pricing."
Not that long ago, costs accumulated throughout the supply chain or factors like delivery lead time weren't really included in Avery Dennison's supplier analysis. Now focused on reducing the total cost of ownership, the company requests proposals from two to three suppliers at a time. Each candidate is then given the same information to perform trial orders and measured on a variety of important metrics.
The information gathered during this process is invaluable, Griffin says. "If we receive good, timely, accurate and comprehensive information during that process, it gives us a degree of confidence that the supplier is taking us seriously and has a mechanism in place to advise of changes," he explains.
However, if during the trial stage there isn't any information or it is inaccurate, that can be indicative of the company culture and the supplier's capabilities. "If they can't do it during that period, it's highly unlikely they're going to be able to do it on an ongoing basis," Griffin says.