Introduction to the Operative Buyer Role

As an operative buyer, your main responsibility is to ensure that goods and services are procured efficiently to meet your organization’s needs. You oversee day-to-day procurement processes, ensuring that orders are placed, timely deliveries, and the flow of materials into the organization is smooth. But what happens when a supplier, critical to your operations, is struggling with communication, and deliveries are constantly delayed? This case study illustrates how you, as an operative buyer, can handle this common challenge by applying key procurement processes, such as order management, delivery monitoring, and supplier communication.

The Problem: Late Deliveries from a Key Supplier

You’re responsible for sourcing components for a production line that runs on a just-in-time (JIT) inventory system, meaning that materials arrive shortly before they are needed to reduce inventory holding costs. One of your suppliers, responsible for providing a critical component, has become unreliable. While their products are of high quality, their poor communication and late deliveries are disrupting the production schedule. This is causing delays, increased costs, and frustration throughout the organization.

Affected Key Procurement Processes for the Operative Buyer

To address this issue, we need to look at the key processes an operative buyer handles, and how each of them plays a role in resolving supplier delivery problems:

1. Ordering Process The ordering process begins with understanding the organization’s needs and placing accurate purchase orders (POs) with suppliers. In this case, the POs for the component are placed well in advance, but the supplier is inconsistent in acknowledging receipt of the order. As the operative buyer, you have already followed the proper steps by sending the POs, but the challenge lies in ensuring the supplier processes and delivers the order on time.
2. Order Acknowledgment Once the PO is issued, the supplier should acknowledge the order, confirming receipt and providing details such as the estimated delivery date. This confirmation allows you to track the order and prepare for its arrival. In this case, however, the supplier often fails to provide timely acknowledgment or skips this step entirely. This lack of communication leaves you uncertain about when, or if, the components will arrive.
3. Delivery Monitoring As part of delivery monitoring, the operative buyer must track the progress of an order to ensure it arrives on time. You have been monitoring the orders, but the supplier’s failure to provide updates is making it difficult to maintain control over delivery schedules. Without proper updates, production teams face the risk of a stockout, which could halt production.
   • Supplier Communication Effective communication with suppliers is key to ensuring smooth procurement operations. In this case, the supplier is not responding to emails or phone calls promptly, making it hard to resolve delivery issues. The supplier’s communication gaps are a major roadblock, and you will need to address this to maintain a strong supply chain.
   • Supplier Performance Management Supplier performance management involves evaluating and monitoring supplier reliability based on factors like quality, cost, and on-time delivery. Your supplier’s repeated late deliveries and poor communication have triggered a red flag. You need to assess their overall performance and explore ways to improve the relationship.
   • Escalation and Collaboration When standard communication channels are ineffective, escalation becomes necessary. You’ve reached out to your supplier’s customer service department, but there has been little improvement. At this stage, collaboration at a higher level may be required. For example, involving your procurement manager or contacting the supplier’s sales or account management team might prompt faster responses.
4. Trigger alternative supplier – part of the Category strategy.
   • Contingency Planning In procurement, contingency planning is critical. If a supplier fails to deliver as promised, you should have a backup plan. One way to reduce risk is by identifying alternative suppliers who can provide the same component. You’ve already identified a secondary supplier, but their prices are higher, and switching suppliers too often can affect long-term partnerships. Instead, you want to improve the current supplier’s performance.

Solutions and Actions – Getting Timely Deliveries

Step 1: Improve Communication through a Regular Meeting Schedule

One of the immediate steps you take is to schedule regular weekly calls with the supplier. These meetings create a structured forum to discuss open orders, address any issues, and ensure that all parties are aligned on delivery expectations. To make sure these meetings are productive, you prepare an agenda that includes reviewing open POs, identifying potential delays, and confirming shipment schedules. Establishing this consistent line of communication helps eliminate some of the ambiguity and sets clear expectations for both parties.

Step 2: Strengthen the Order Acknowledgment Process

You reinforce the importance of timely order acknowledgment by requesting that the supplier confirm receipt of all future POs within 24 hours. To ensure this happens, you implement an automated email system that follows up on unacknowledged POs. By making it easier for the supplier to confirm orders and by setting a clear deadline, you reduce the chances of miscommunication.

Step 3: Implement KPIs for Supplier Performance

To hold the supplier accountable, you introduce key performance indicators (KPIs) that focus on delivery accuracy and response times. You communicate these KPIs to the supplier, letting them know that their performance will be tracked and discussed regularly. The KPI reports allow you to monitor their improvement over time, providing hard data that can be used in future negotiations or performance reviews.

Step 4: Build a Contingency Plan

While working on improving the current supplier’s performance, you also strengthen your contingency plan. You negotiate with the secondary supplier to secure favorable terms in case you need to switch, but you also emphasize that your preference is to maintain the relationship with the current supplier if they can meet your expectations. This approach gives you the flexibility to switch suppliers if necessary, without abruptly ending the current partnership.Typically finding an alternative supplier would be part of the category strategy and executed by the Tactical buyer role.

Step 5: Leverage ERP for Better Tracking

You integrate your company’s Enterprise Resource Planning (ERP) system to automate order tracking. The ERP system allows you to generate alerts when a supplier hasn’t provided an acknowledgment or if a delivery is at risk of being delayed. This technology helps streamline the procurement process and keeps all stakeholders informed about order status, minimizing surprises.

Step 6: Conduct a Supplier Performance Review

After three months of regular meetings and improved communication, you schedule a formal supplier performance review. In this meeting, you present data showing the supplier’s progress on KPIs, including their order acknowledgment and delivery times. While there has been some improvement, there are still occasional delays. You discuss the possibility of extending the collaboration if the supplier can fully meet the required performance standards in the coming quarter.

Conclusion: Achieving Timely Deliveries

As an operative buyer, ensuring timely deliveries is a critical aspect of your role. Through a structured approach—improving communication, setting performance expectations, and leveraging technology—you’ve managed to address the supplier’s delivery issues while maintaining a positive working relationship. This case highlights the importance of clear communication, consistent monitoring, and proactive problem-solving in managing supplier relationships.

By applying these key procurement processes, you not only resolve the immediate challenge but also strengthen your overall supply chain. As you continue in your role, these skills will help you navigate future challenges, ensuring that your organization’s procurement operations run smoothly and efficiently.

Case is part of the course Operative Processes, the first course of three, introducing key responsibilities of the operative buyer role.

If you want to learn more and deep dive in how to managea supplier having a hard time delivering, visit the blogpost about Expediting.

Note: Illustration to the blogpost “Case Study: Managing Timely Deliveries from a Communication-Challenged Supplier” was created by Chat-GPT on Oct 20, 2024.

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