When it comes to managing suppliers within a global supply chain, state-of-the-art technology is no panacea, says White. Of much greater importance is a company's ability to collaborate with suppliers to ensure the quality of product as it moves to market.
Emerson works with a number of distant vendors. To offset the drawbacks of geography, it insists on knowing of any quality problems well in advance. It's essential that the company have time to react. "If the quality isn't there," White says, "we're going to add cost to it." Defective or poorly made materials need to be handled separately or returned to the vendor, raising the possibility of delayed deliveries and unhappy customers.
The issue is primarily one of visibility. But merely tracking the progress of a shipment across the ocean isn't enough. The receiver needs to have in place a set of strict performance metrics that it has deemed important to the organization. They are applied to all shipments at the point of origin. Says White: "It's better to understand how good the quality is before it's put on the ocean."
It's vital to select the right metrics, so that the company isn't inundated with useless information. The act of determining what's pertinent "takes some homework on both sides," White says. Supplier and receiver should have in place an agreement that lays out precisely the information to be relayed, who is sending and receiving it, and how the company will respond to any issues.
Things can get complicated when the receiver is dealing with multiple tiers of suppliers. Part of the solution lies in making sure that the Tier 1 vendor takes responsibility for the performance of suppliers further up the chain. The ultimate receiver should also be in the picture, with metrics that apply to all suppliers, White says. Emerson deals with large contract manufacturers as well as "mom-and-pop" vendors. "Once we understand and negotiate what we're going to get," he says, "it tends to work."
"Suppliers are an extension of ourselves," he says. "If suppliers aren't successful, we aren't successful."
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