"N2EY" wrote

Then they should not complain when the hardware store and the American
power tool plants shut down, quality degrades, unemployment rises,
etc.

Whoever can deliver the best value for my dollar (note I didn't say
"cheapest"), regardless of what imaginary boundary drawn on the surface of
the globe they inhabit, will capture my business. I do that in my business
and I do it in my personal life. If every commercial enterprise built
their business model on that principle then the best would flourish and the
poorest would wither. What a concept!

73, de Hans, K0HB

In article k.net, "KØHB"
writes:

"N2EY" wrote

Then they should not complain when the hardware store and the American
power tool plants shut down, quality degrades, unemployment rises,
etc.

Whoever can deliver the best value for my dollar (note I didn't say
"cheapest"), regardless of what imaginary boundary drawn on the surface of
the globe they inhabit, will capture my business. I do that in my business
and I do it in my personal life. If every commercial enterprise built
their business model on that principle then the best would flourish and the
poorest would wither. What a concept!

How do you determine "best value"?

Does it include things like whether the producers used environmentally-friendly
processes, the working conditions of the workers who actually make the product,
etc.?

Or is it based solely on the product itself, with no concern about its
production process?

73 de Jim, N2EY

"N2EY" wrote

How do you determine "best value"?

Depending on the product it can be a variety of things, sometimes a very
complex mix of parameters determines "value". My factory purchases
products of many different types, complexities, which they range from pure
"commodities" like solder to specialty products like custom chips, plastic
moldings, and similar "proprietary" materials which find there way into our
finished goods.

Obviously price factors into the mix, and all other things being equal,
price wins.

But "all other things" are almost never equal. For example, some suppliers
have earned "dock to stock" status with us because their outgoing quality
control is good enough that we do not have to perform incoming quality
control. This saves us money (inspection labor) and time (no delay in
inspection) so we favor such suppliers even if they may charge slightly
higher prices, and they benefit by earlier payment because their invoice is
not held pending QA acceptance of their product. Other favorable factors
would be their willingness to deal with us on a "consigned inventory" basis,
shield us from part shortage allocations, and similar "pipeline" issues.
Suppliers with a "track record" are generally favored over "new guys", but
new guys who can demonstrate "value added" (which can be a host of things)
will certainly be given some business to prove their case. Within reason,
we will favor enterprises "close to home" because we feel an obligation to
contribute to the communities where we live and work, and there is an
obvious advantage to dealing with a supplier who you can quickly meet for
lunch to discuss issues, rather than by telecommunications or strapping a
757 to your ass for several hours.

As you can see, "best value" encompasses many factors and issues beyond the
actual physical product which you touch and feel.

Does it include things like whether the producers used
environmentally-friendly processes, the working
conditions of the workers who actually make the product,
etc.?

No ethical company would ignore those issues. Certainly we will not
knowingly deal with suppliers who pollute the environment or mistreat their
workers, but we are not staffed with EPA-like or OSHA-like inspectors and
evaluators In cases where we are qualifying a new significant new
supplier, we perform on-site evaluations which give us some visibility
of working conditions, etc., but it is naturally not an in depth review of
their HR practices, or validating their compliance with EPA standards.
Were we a huge conglomerate like General Motors or IBM, I'm sure
we'd have more formal means of dealing with this issue, but in the
meantime they obviously are subject to the usual state, federal,
provincial (or whatever) regulatory constraints. We make a special
effort in the area of supplier diversity, and support many regional
Supplier Diversity Councils, such as Chicago Minority Business
Development Council, Dallas/Ft. Worth Minority Business Development
Council, Georgia Minority Supplier Development Council, Minnesota
Minority Supplier Development Council, Virginia Regional Minority
Supplier Development Council, Southern California Regional
Purchasing Councils, Inc., and others. This context includes woman-owned
or veteran-owned enterprises.

73, de Hans, K0HB

"KØHB" wrote in message thlink.net...
"N2EY" wrote

How do you determine "best value"?

Depending on the product it can be a variety of things, sometimes a very
complex mix of parameters determines "value". My factory purchases
products of many different types, complexities, which they range from pure
"commodities" like solder to specialty products like custom chips, plastic
moldings, and similar "proprietary" materials which find there way into our
finished goods.

Obviously price factors into the mix, and all other things being equal,
price wins.

But "all other things" are almost never equal. For example, some suppliers
have earned "dock to stock" status with us because their outgoing quality
control is good enough that we do not have to perform incoming quality
control. This saves us money (inspection labor) and time (no delay in
inspection) so we favor such suppliers even if they may charge slightly
higher prices, and they benefit by earlier payment because their invoice is
not held pending QA acceptance of their product. Other favorable factors
would be their willingness to deal with us on a "consigned inventory" basis,
shield us from part shortage allocations, and similar "pipeline" issues.

All of which are essentially "price" issues because you wind up
paying, one way or another.

Suppliers with a "track record" are generally favored over "new guys", but
new guys who can demonstrate "value added" (which can be a host of things)
will certainly be given some business to prove their case.

Plus it keeps you from becoming totally dependent on one supplier.

Within reason,
we will favor enterprises "close to home" because we feel an obligation to
contribute to the communities where we live and work, and there is an
obvious advantage to dealing with a supplier who you can quickly meet for
lunch to discuss issues, rather than by telecommunications or strapping a
757 to your ass for several hours.

As you can see, "best value" encompasses many factors and issues beyond the
actual physical product which you touch and feel.

Exactly! And I agree with all of these policies 100%.

Does it include things like whether the producers used
environmentally-friendly processes, the working
conditions of the workers who actually make the product,
etc.?

No ethical company would ignore those issues. Certainly we will not
knowingly deal with suppliers who pollute the environment or mistreat their
workers, but we are not staffed with EPA-like or OSHA-like inspectors and
evaluators In cases where we are qualifying a new significant new
supplier, we perform on-site evaluations which give us some visibility
of working conditions, etc., but it is naturally not an in depth review of
their HR practices, or validating their compliance with EPA standards.

Sounds like a very reasonable approach. And if a supplier were
deficient in those areas, or tried to hide things, I bet your company
wouldn't do business with them - even if it meant paying more,
elsewhere.

Were we a huge conglomerate like General Motors or IBM, I'm sure
we'd have more formal means of dealing with this issue, but in the
meantime they obviously are subject to the usual state, federal,
provincial (or whatever) regulatory constraints. We make a special
effort in the area of supplier diversity, and support many regional
Supplier Diversity Councils, such as Chicago Minority Business
Development Council, Dallas/Ft. Worth Minority Business Development
Council, Georgia Minority Supplier Development Council, Minnesota
Minority Supplier Development Council, Virginia Regional Minority
Supplier Development Council, Southern California Regional
Purchasing Councils, Inc., and others. This context includes woman-owned
or veteran-owned enterprises.

Thanks for a complete and concise answer, Hans. And for showing that
it's not just the bottom line that drives business decisions.

73 de Jim, N2EY

N2EY wrote:

Thanks for a complete and concise answer, Hans. And for showing that
it's not just the bottom line that drives business decisions.

Ah, but I think you missed the best part of the whole message, Jim. Every
action I described has a tendency to reduce my overall cost of goods sold,
either in reducing fixed factory costs, in reduced variable costs, in
higher inventory turns, in shorter manufacturing cycles, in better cash
flow, or in reduced headcount. All of that DOES drop directly to my bottom
line.

73, de Hans, K0HB

"KØHB" wrote in message thlink.net...
N2EY wrote:

Thanks for a complete and concise answer, Hans. And for showing that
it's not just the bottom line that drives business decisions.

Ah, but I think you missed the best part of the whole message, Jim.

I didn't miss it, but perhaps I wasn't clear about my appreciation of
it. I wrote about how those policies were all "price" policies because
they worked to reduce the true cost of things bought. (If you have to
spend a nickel to inspect every 10 cent widget you buy, it's actually
cheaper to buy a 12 cent widget that doesn't need incoming
inspection). Etc.

Every
action I described has a tendency to reduce my overall cost of goods sold,
either in reducing fixed factory costs, in reduced variable costs, in
higher inventory turns, in shorter manufacturing cycles, in better cash
flow, or in reduced headcount. All of that DOES drop directly to my bottom
line.

Not every action! The ethical concerns you mentioned would tend to
raise it, if:

1) you spend money to check out suppliers
2) you would refuse a lower priced supplier on ethical grounds alone -
even if the supplier wasn't breaking any laws.
3) you spend more money to buy from local and minority/woman owned
companies, etc.

Of course all three can be looked upon as long-term investments that
will ultimately benefit the bottom line 'someday'. Much better than
taking a short-term view that ultimately winds up costing more in the
long term.

And I agree with all those actions 100%.

73 de Jim, N2EY