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"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 |
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