Tought Leader


Supplier Relationship— Key Performance Indicators


WRITTEN BY ROBERT T. PUDLEWSKI S


chool bus operators often focus on one performance indicator for their suppliers: Price. And price certainly is


important when you’re selecting suppliers to accompany you as you operate your transportation department. But there is more to suppliers and their


products than an invoice. Tere is also more to the cost of doing business with a supplier than the amount on a purchase order. Remember, OEM and aftermarket suppliers are in business to make money. Don’t be surprised if they do not develop any semblance of a working partnership, or if they stop calling on you outright, if you haggle with them over every bill. Continuously asking them to cut prices on everything they sell to you can terminate a partnership just as fast as your failing to pay your bills promptly. Following price, quality and reliability


are the next key performance indicators to look for in suppliers and their products. Good suppliers provide quality products. Tey will ship the right number of items and in the expected condition, as promised, on time, every time. Stability is another key performance indicator. You will want to create a relationship with school bus OEMs and aftermarket product suppliers that have been in business a long time—and have done so without changing business models every few years. A school bus product supplier with long- tenured senior executives is another good


sign. So is a solid reputation with other customers. Tat is a promising indicator that the supplier company is stable. It is these individuals who will cultivate a partnership with customers. Be sure to become familiar with the


supplier’s distribution network. Products that are ordered from a distant supplier warehouse can take a long time to reach you and can quickly generate added freight charges. Before completing any order, find out


how long a shipment will take to arrive at your location. If you are likely to need something fast, a supplier with distant distribution centers could present a real problem.


Also, be sure to understand the impact of quantity on freight policies before you order. If you order a certain quantity, for instance, you may receive free shipping. You may also consider combining inventory and planned replacement needs into one order, thereby saving on freight costs. Align with suppliers that can offer the latest, most advanced products and services. Having well-trained employees to sell and service their goods, and who are able to offer you a variety of attractive financial terms on purchases, are also important. If you are a large customer of a small


supplier, you will normally receive more attention, and possibly better service and reliability, than if you are a small customer of a large supplier. Any supplier should have a trustworthy attitude toward you, their customer, so that they are willing and


eager to work with you, to help you run your transportation program as efficiently and economically as possible. Having fewer suppliers is usually better


than having many suppliers, along with the larger headaches or errors that usually come with having to deal with more companies and people. Reducing the number of suppliers you deal with also cuts the administrative costs of working with many organizations. Closer relationships with fewer suppliers


allow you to work together to control costs. Really good suppliers can quickly increase the efficiency of your purchasing and administrative staff. It is worth taking the time to analyze


your purchasing history by a review of your accounting department’s supplier list, to determine where most of your spending is going. Tis is also a good opportunity to use that data to negotiate favorable terms with your preferred suppliers.


IT’S OK TO BE A DEMANDING CUSTOMER


Having said how valuable and


important a supplier can be to you, I’ll now say that you should not be a patsy. You can be a demanding customer— but just be fair. State your quality and delivery timing needs clearly. Hold your suppliers to their agreement. Make sure they stay competitive. Tell them you never expect to pay higher prices than other purchasers that are similar in size to your district or company. Finally, once you build a supplier


Robert Pudlewski is STN’s technical editor, and an industry consultant on fleet management, maintenance, procurement and technology implementation. He is the retired vice president of fleet operations, procurement and maintenance for Laidlaw. In 2014, he was inducted into the National School Transportation Association Hall of Fame.


22 School Transportation News • JANUARY 2019


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