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Supplier Criteria

Do They Apply to Internal Suppliers, Too?

Most well-managed companies track the performance of its suppliers. Or more specifically, they track the performance of their external suppliers.

Common Supplier Criteria

  • Lead time
  • Quality
  • On-time delivery
  • Responsiveness to questions and problems
  • Orders shipped complete
Do your supplier criteria apply to internal suppliers?

Do your supplier criteria apply to internal vendors?

As you can see, there are many criteria with which to measure suppliers. Here’s the question, though. How many of these well-managed companies also hold their own internal suppliers to these same criteria?

One of my Japanese consultants asked me a question many years ago that got me thinking about this. He asked why we let our internal suppliers behave worse that we would let our external suppliers treat us.

You can ask yourself this related question: Would my internal supplier win my business over an external one if the work went out for bid?

For some reason, companies tend to tolerate poor performance internally far more than they do with external vendors. There’s probably a feeling that the costs are far lower, so they should put up with more, but is that true? If poor quality or late deliveries disrupt flow, is that really cheaper? Lean companies, because of the small amount of inventory on hand, require top-flight performance from their suppliers.

Try this experiment. Add your internal suppliers to your vendors list, and see how they perform on the same supplier criteria. My guess is that you’ll be surprised at where they stand.

And let us know what you find when you do. Or more helpfully, let us know what you have done to improve the performance of your internal suppliers.

(This post is one of the items in my article, 17 Lessons I Learned from Japanese Consultants.)

 

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2 Comments

  • […] Supplier Criteria: Do They Apply to Internal Suppliers, too? dal blog Gotta Go Lean di Jeff Hajek: Perché i nostri fornitori interni hanno prestazioni inferiori di quelle che vengono permesse ai fornitori esterni? Aggiungete i fornitori interni nell’elenco di fornitori qualificati e valutateli con gli stessi criteri: rimarrete sorpresi… (traduzione automatica) […]

  • Tim McMahon says:

    Good post. We actually track quality performance and on-time delivery of our internal suppliers. I would say that you can go too far the other way too based on experience. We hold our internal suppliers to a much higher standard than our suppliers. This is necessarily bad but what you can have if you don’t address the root cause being the external supplier performance is the internal supplier trying to fix vender issues internally instead of pushing them back to the supplier.
    Set the same standard for all in the supply chain and it will work much better.

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