Question

Discuss the benefits to a buying company of certifying its supplier. Describe the benefits to a supplier of being certified.

Answer 1

Supplier certification is an important component in managing the total quality which ensures that supplier's product is produced, packaged, and shipped under a controlled process that results in consistent conformance to company's requirements.

Some benefits for having certified suppliers are :

1) Better Visibility - This ensures to map the performance of the suppliers on tangible grounds rather than guessing.

2) Remove hidden costs - By applying this method the companies can target to remove extra hidden cost such as freight charges and overtime and obsolete inventory by mapping the performance of the suppliers and ensuring that they are not inefficient.

3) Leverage the supply base - By measuring supplier performance, an enterprise can set a threshold for its suppliers that can lead to higher-quality results. Companies can better plan new products and services based on a good understanding of its suppliers’ capabilities and performance levels.

4) Align customer and supplier business practices - A supplier who is unaccustomed to pursuing continuous improvement may be unable to keep up with its customer's increasing requirements for better, cheaper, faster goods and service. Hence it is important to keep supplier practices aligned to the customer needs.

It is equally important for the suppliers to have certifications as based on this only they can gain trust of firms and have them ensured of their qualities. Additionally, they can boast of having a strong customer base and knowledge of the market. If they have been certified as suppliers they can ensure that they know how and when the market trends change and accordingly adjust their supplies to the firm's needs. With this they not only become efficient in their work but can also reduce the extra costs of the company by controlling the inventory and warehousing charges.