How to achieve transparency with your Vendor Relationship

I have been working in the apparel supply chain, sourcing, and operations for 30 years. During that time I have built my own million dollar brands, worked for specialty brands, startups, and Fortune 100 companies, managing supply chains with small to large volume orders under strict compliance standards.

From 2008 til 2015, I lived in China where I was on a mission to bridge the “disconnect” among buyers, suppliers, and industry professionals.

I am thankful for my experiences in China; I had the opportunity to transform supply chains by pushing for transparency through optimized management systems. There were far too many issues with quality (substandard products) and late deliveries (delays) and price (increasing). All of this affected the TCO (total cost of ownership) of the actual product.

What I found was the issues arose from the distant transactional interactions, which resulted in a hands-off management style.

Management

Attempting to manage from a distance ultimately means you have to believe whatever your supplier tells you. Too often, if you are not present in their office or the factory, the supplier will tell you what you want to hear, rather than inform you about all the relevant issues. Your presence at the factory gives you the opportunity to be able to read between the lines to discover what is really going on.

On the other hand, if you have a regular presence (full-time stationed staff) with the supplier. If the vendor has the proper managerial systems based on personal integrity, there is a chance you will more easily detect problems or inconsistencies.

Getting involved early and staying involved can help avoid possible production disruptions and late deliveries.

Production

There are many complexities during production, even for companies with local office and staff. Some of the challenges are cultural differences and business practices; what is acceptable in your their country may not be acceptable in your country. And vice versus.

To mitigate these issues, I began a rigorous review of the relationship. This involved overseeing the management structure, policies, procedures, systems, and working documents, I also had to review the vendor staffing and training (or lack thereof).

At factories producing millions of dollars of product, I insisted on full-time quality assurance staff.

I frequently visited the vendor for regular reviews; Working with external staff, managers, and executives to review our policies and procedures. Applying six sigma, Kaizen (constant improvement) and lean operations to improve efficiency and operational performance.

You have to ask a variety of questions, often the same questions to various people to see if the response is consistent.

Ask Questions

Below is my checklist of questions to ask before starting to work with a new supplier:

  • Does this factory really have the available capacity? A “yes” from the factory isn’t enough. You need to investigate on your own.
  • With outsourcing all too common, you must ask where is the production allocated and if the allocation is the actual source of the production.
  • It’s important to know who owns the business and their core values.

Vendor Review

  • Does the vendor care enough about the product (quality, delivery, and especially the end consumer) or are they overwhelmingly concerned only about growth and profits?
  • What is the infrastructure of the factory actually producing your production?
  • It’s important to do a proper review of the building, equipment, and maintenance records.
  • Reviewing employee expertise, experience, performance measures, and training.
  • Examine cash flow, financial planning, and budgets.
  • When, where and how is your key contact involved? Are they merely there for communication? How competent and experienced are the people who are actually completing the tasks?
  • If you’re working with an agent, how does the agent/supplier/factory allocate your production? Do they actually vet, validate and visit the production factory?
  • Is the factory that produced the sample making the full production?
  • How they will ensure the bulk production is the same as the approval sample.
  • What happens when there are last-minute changes to a product just before starting production? Does this affect the ship date, can the approved factory still handle the production or will the order be outsourced?
  • Ask questions that will indicate if your inspectors are focused on their individual needs or their relationship with the supplier.
  • How do you detect when a factory is outsourcing part or all of your production?
  • Is there someone from your company who checks the performance? When the factory that was selected cannot meet the KPI’s (number of sewing lines, number of sewers, daily output, etc) for the delivery?
  • Was the vendor vetted, validated, and visited? Was proper onboarding of the supplier done?

Conclusion

At the end of the day, you need an individual on the ground who is looking out for the best interest of the end consumer and your brand integrity.

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