You are only as good as your worst vendor

I have made this statement many, many times: you are only as good as your worst vendor. But what if the general tendency is for a majority of vendors to fall in quality and delivery? Is there such a thing as business entropy? You know, where organizations tend towards chaos normally held back through organization and strength and a need to produce quality and reliability as well as customer service.

But what happens when everyone starts pulling back because of a perception of problems with ‘the economy.’ Reduce manpower, experience and inventories? Eek out a little more profit at the expense of ontime delivery for the sake of being driven by accounting rules and software. Makes a great excuse, doesn’t it? The impact on customers – well, that is just something that will take care of itself… right?

Recently I have been watching vendor delivery times get longer, their customer service falling behind, ready stock and inventories disappearing, and quality of delivered parts and materials being absurdly poor. Not just from poor or mediocre suppliers, but also from companies with long-term reputations for excellence. The problem seems to have been accelerating over the past couple of years to a point where it is becoming unbearable.

One of the early issues I noticed was things such as materials being well past their shelf life (as in 3-4 years in a few cases) being provided as new. Then it was poor quality magnet wire which had longer and longer waiting periods (for special dimensions), in many cases extremely long – such as four months – for materials that were kept on the shelf in the past. Calling customer care centers has been adventurous as the number of people have been cut or outsourced, sometimes to people with less information than the caller.

I returned to the motor repair industry partly because I had noticed quality levels drop out and some really shady business practices that had existed but were now becoming more prevalent. I returned to the leader in quality and reliability to assist in providing a beacon of quality and reliability back to the repair industry, an industry that goes back four generations in my family and one that I have been in since I was 18 (in the US Navy, it was lubrication and automotive from the time I was 16 at Amoco Labs, Naperville as part of the Vocational Industrial Clubs of America). My efforts were always to work for the best and to promote quality and reliability in every aspect of the industry from the beginning, including research and development into rotating machinery quality and reliability which expanded to complete industrial systems.

While I refuse to make excuses for unbelievably poor workmanship and business practices by many organizations, I do have to say that keeping ahead of the decline in quality and workmanship by large suppliers is a challenge that requires forethought and hard work. This includes the practice of adjusting min-max levels, a dedication to quality and reliable workmanship and ontime deliveries.

Recently discussions with a number of colleagues and equipment manufacturers, as well as other quality service centers, has identified that the problem is not unique and that I have not been imagining the disease. It is also not limited to a few suppliers, but pretty much across the board as cost reductions have hit the point of the ridiculous! Let alone a complete lack of common sense. But then again: “Common sense is not that common.” – [Mark Twain].

The only response has been an increased investment in incoming inspections, a higher rate of poor quality materials being sent back, and other measures required to meet delivery quality and reliability expectations. This means that those companies that are not alert for delivery/vendor defects will incur higher costs (warranties) and produce lower quality in their products and services. It also provides a distinct advantage to those suppliers that do opt to provide ontime delivery and quality products.

Recently I have noticed a few unknown suppliers and vendors attempting to fill these niches and even more recently where at least one where senior management of one large supplier became directly involved in a significant problem with their material. In this case, we are working with directly with their QC department to identify the cause and impact (participating in the RCFA). Mind you, I had to use a little influence to reach the level I approached after a lack of success with normal channels.

The impact that this issue is having on both new equipment manufacturers, as well as some of those manufacturers lacking in ready inventory and longer deliveries, the impact on the quality of service by many others, and availability of skilled workers is now significant. The recent economic issue has pushed forward the problems that I had predicted for 2014 to the present rather quickly.

With many end users having pushed to reduce inventories and MRO inventory, what do these problems do to this effort? Do companies now have to adjust what they called right-sized a few years ago to adjust for vendors and reliability issues? Or, will they maintain the status quo and continue reductions with the ultimate impact of reducing overall capacity of their facilities? What is the long-term impact of that effort? Especially as we have just started seeing many companies move their production back to the USA? Have we ‘leaned’ things beyond a point?

Why are we seeing this problem? Is your business seeing the same issue? How are you addressing it?

Please note: having been a consultant that has had to help companies out after other companies have made complete messes out of businesses – the usual meaningless marketing drivel is not what I am looking for (ie: throwing together a few impressive sounding words that mean nothing at all). I usually find that stuff (I have another word, but discovered that my kids read this, another PC word would be rubbish) amusing, and that is all. To date I have only ever found any such as either exacerbating the problem or completely useless. I am looking for common sense in plain English (does that even exist anymore?). My favorite are the companies that claim to perform RCFA or other solutions that pronounce methods to fix situations without even knowing the causes, or having a clearly defined statement of the problem – and if you know what I mean, then you are a step ahead of the rest. I mean, how can you expect to provide RCFA, or solutions, training or assistance if you don’t even follow the basic tenets of what you are claiming to be an expert at? Hmmm?

Sincerely,
Howard W Penrose, Ph.D., CMRP