When organizations adopt formal supplier management programs, one of the first steps they take is to focus on a more disciplined approach to collecting and managing basic information about current and potential suppliers.
I am interested in the kind of data they collect and how they use it to manage suppliers so I took a look at supplier registration forms for a wide variety of companies and I was surprised by a couple of things:
- First, the data requested from many companies across multiple, diverse industries was remarkably similar.
- Second, I was surprised that companies asked suppliers to answer broad, open-ended, essay-type questions.
Why are different types of companies collecting the same types of information?
The companies I reviewed ranged in size from medium to very large and included industries such as biomedical, retail, manufacturing, healthcare services, and more. I hadn’t expected such different companies to be collecting so much of the same information. Of course there were differences and I don’t think any two companies requested the exact same set of information, but the similarities were significant. The following information was requested in over half of the cases I reviewed:
- # of Employees
- Year Established
- Publicly/Privately Held
- Financial History (e.g. Gross Annual Sales for the past three years)
- Tax ID #
- Commodities/products/services offered (NAICS Codes)
- DUNS #
- Geographic Locations Served
- Customer References
- Quality Certifications (AS9100, AS9110, ISO9001, ISO14000, NADCAP)
- Diversity Information and Certifications
How do organizations decide what supplier information is important?
I was thinking about how organizations determine what standard supplier information they want to collect. I realized that, if I were advising an organization on how to do that, I would tell them to create a brief, high-level list of generalized characteristic that they want in a supplier company. This list should reflect the philosophy and core business values of their organization. I created my own list and came up with some characteristics that I think many different organizations might find generally desirable:
- Quality products at competitive prices
- Stable company with good financial standing
- Responsive to customer needs
- Focused on continuous improvement
- Deliver goods and services on time and as promised
Most of the commonly-collected data elements that I found map directly to one or more of these items. Individual organizations may have a few requirements that are unique to their corporate culture or mode of doing business, but I think there aremany more general characteristics that are universally desirable in a supplier. I believe that the information that supports these ideal supplier characteristics is becoming standard for basic supplier information management and that’s why so many different companies are asking their suppliers the same questions.
What do you think about my “universal characteristics of the ideal supplier” theory? Also, share your own method for determining what information you collect about suppliers.
Don’t forget to check back in for Part 2where we discuss another surprising trend: Essay Questions for Suppliers.