Watch Out For These Subtle but Significant Profit Leaks

Thursday, September 12, 2013 , Uncategorized, by Rich Rafdahl

When I have been invited to assist a new company or client, I have been surprised by how often businesses accept and tolerate sub-par performing suppliers. These are not the suppliers that create absolute havoc since they are terminated in short order. No, these suppliers are more subtle in the ways they drain your company’s productivity, efficiencies and profitability. Their actual performance is often camouflaged since they provide the very basics well (i.e. quality product at a competitive price) but not much else. These poor performers typically affect your company’s competitiveness and effectiveness with their erratic performance, inaccurate data integrity and poor processes. The following are some telling signs that you may have a below-average supplier.

DSCN00551. Your company is assigned an average sales or customer service person who is difficult to contact or requires constant follow up.

2. Your staff is frequently on the phone to resolve issues pertaining to backordered items, routine late deliveries, missing packing slip documentation, approvals to return the incorrect material, a difficult truck driver, pricing errors or any number of other problems. Again these may not be big issues individually but these inconvenient events, when repeated, require significant time and effort to resolve – which takes your team away from more productive and profitable work.

In essence, they quietly drain your company’s most critical resource – your staff’s time.

Obviously, a great supplier is one who actually helps your business become more successful and in the rare event of a problem go out of their way to resolve and minimize the impact on your business. These excellent suppliers are no accident. Many have worked hard to adopt a performance and quality culture that distinguishes them in the market place and they take pride in the experience they offer their clients. There are others, though, who have become excellent suppliers because a customer, such as your company, has held them accountable to a higher standard. I bring this up since firing your below-average supplier may not be that easy since there may limited alternative supplier options. If this is the case, I have some ideas that may help improve you current supplier’s performance in my next blog.

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