Before "Impeaching" a Supplier
Thinking of Replacing an Incumbent Supplier?
PurchTips Edition #376
By Charles Dominick, SPSM, SPSM2, SPSM3
In the supercharged political environment in the USA, the topic of “impeaching” has come up more than once recently. Impeaching involves finding a government official guilty of wrongdoing and usually triggers that official’s removal from office.
In procurement, we often find ourselves ready to “impeach” an incumbent supplier. A key supplier fails to perform, so we document how they’ve failed and we seek a replacement.
Unfortunately, many procurement professionals wait until problems with an incumbent supplier get way out of hand before sourcing for a replacement. This often leads to a difficult transition period where sales and customer service is negatively impacted.
So, even if you’re confident that your incumbent suppliers will continue to perform acceptably, it is important to have a documented contingency plan in place to make the “supplier impeachment and replacement” process go as quickly and painlessly as possible. You could even make it part of your sourcing process to create such a plan immediately upon awarding a contract to a supplier. That contingency plan should provide answers such as:
- Who would be the supplier or suppliers best suited to replace the incumbent?
- What are the disadvantages of the replacement supplier(s) compared to the incumbent?
- How long would it take the replacement supplier(s) to ramp up to match the productivity of the incumbent?
- How much additional cost per year would be incurred by switching to the next best supplier?
- What are the potential root causes of supplier failures that could affect both the incumbent and any replacement supplier (e.g., unavailability of raw materials used by both suppliers)?
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