If in traditional terms you have a varied production base, you have a pool of providers that produce different things for you. At some stage in time, the various parts that make up your company’s end product come together. Think about the work, time, and money involved in making this happen; use five suppliers and the associated risk to ensure that everything is perfectly combined. Below is a sample of this method. I ask you to think of all the job that your company is doing and the price of doing business like this?
For your end product, you outsource the following parts through a traditional varied supply base in process (A) shown below.
Process–A • Supplier (A) has CNC machining capacities and produces two bushings delivered to provider (D) for you.
Supplier(C) is equipped with tubular processing machinery and produces for you two steel pipes delivered to the provider (D).
Supplier (D) has welding capacities and welds sub-component components sent by providers A, B and C together. This sub-component will be delivered to the provider (E).
Supplier (E) has powder-coating capacities and coats the sub-component that provider (D) welds together and sends to you.
You have five distinct vendors engaged in completing your item in the above process. In this situation, at least five distinct orders are generated by your business and all expenses involved are incurred, from creating a purchase order to paying the invoice. Think about the handling, transportation, time, communication demand and significant quality risk engaged in the above process so that everything operates as scheduled. What are the real complete expenses of receiving your item? Now, I’m asking you to consider something that’s not just going straight in Process A and rising your danger and total price?
Take the instance above and use what I call a varied supplier, Summit Steel & Manufacturing, and I ask, what is meaningful?
Process–B • Summit Steel & Manufacturing, produces two bushings, three laser and shaped parts, two manufacturing of steel pipes, welds these seven components together and then coats the sub-component with powder and sends it to you. Everything in the house and before your typical lead times.
How would you use Process A or use Process B, or are you doing company? I think the decision is fairly evident and if you look at your complete price and check your quality and service, method B, it’s the option I’d use for my company. Supplier diversity is not the amount (quantity) of accessible providers, but rather the use of providers, such as Summit Steel & Manufacturing, with unparalleled skills, knowledge and expertise combined with competence and unwavering client service.
A genuinely varied provider will provide your business with the following benefits
Shorter lead times, begin to finish Lower transportation costs
Reduction in handling Reduction in product quality danger
Reduction in administrative costs Improved communication Streamlined
ordering and processing
Highly qualified, skilled, cross-functional people
A provider who understands your business well.