An empowered supplier is a competitive ace card

Brands and retailers can have relationships with a great number of suppliers, which can reach in the thousands for the bigger players. When the volume is that high, it can be difficult to think of individual suppliers as anything more than a transactional necessity for the manufacturing of hardline goods. But brands and retailers that see their suppliers this way may miss out on what their more reliable and advanced suppliers can offer them.

Increasing numbers of brands and retailers are looking for ways to empower their suppliers, but this is easier said than done. Effective buyer and supplier collaboration is not only about open communication across the entire supply chain, it’s about enabling the suppliers to feel they can share ideas and make recommendations as the true owners of hardline product quality.

While working with empowered suppliers is the ultimate goal, the path to getting there isn’t always straightforward and should be broken down into smaller goals. Some of the most common challenges brands and retailers face when looking to empower their suppliers include:

• Easy to say, but not to do
• Time-consuming
• Empowerment is based on trust but needs a system for monitoring
• Reluctance from some factories
• Unclear quality liability

Supplier empowerment: Where to begin
It’s important to keep in mind that empowering your suppliers means being in direct contact with them. Using intermediaries that muddy the waters can complicate the task and make it more difficult. Another question to ask is whether all your suppliers can be empowered. To answer this, you need to have a clear understanding of your supply chain. The factories most likely to align with your expectations will be the more strategic and trusted ones with a long-term approach. These are usually factories with a solid QMS and with whom there’s already fluid communication, a solid investment, and projects demonstrating growth to make this commercial relationship last.

You can start by asking some simple questions:

• Are you working directly with factories or through vendors?
• Do you have top factories that you work with?
• Do you have long-term partners?
• Do you have a stable sourcing strategy? Or do you shift countries frequently?
• Do you create partnerships with your manufacturers?
• What incentives will you bring to the factory? Will you bring more orders?

As essential as it is to understand where you stand before launching an empowerment program, it’s equally important to make factories understand the benefits for them. Among other elements, advantages for empowered suppliers include:

• Less external control
• Cost and time savings
• Improved quality processes and production output
• Improved partnerships with customers that can result in more orders

Supplier empowerment: Implementing an effective program

Empowering suppliers also offers significant benefits to brands and retailers of hardline goods. It allows for better resource optimization, going further upstream, and doing more quality assurance, ultimately reducing costs and allocating budget to areas of risk. The final objective would be to replace third-party inspections by shifting quality ownership to the suppliers. This would increase efficiency and ensure continuity, even during disruptions like those we saw in the last couple of years.

Brands and retailers with a solid quality management team can put all this in place through their internal teams, allocating time and resources to train and monitor their selected suppliers. That said, this sort of program, while worthwhile, isn’t easy to implement. It’s a time-consuming process that requires constant follow-up and a strong and comprehensive setup. Continuous monitoring is also necessary to ensure that factories are qualified and maintain expected quality standards.

Brands and retailers have the option to bring in additional resources and use a qualified third party to take charge of the program instead of allocating it to an internal team.

A 7-step program: The ‘Factory Certified Auditor Program’

At API, we support our clients’ supplier empowerment strategies as part of our global risk-based approach. We’ve implemented a 7-step program, the ‘Factory Certified Auditor Program,’ designed to empower the best-performing suppliers to perform their own inspections. The 7-step program covers:

1. Program introduction to vendors
2. On-site assessment
3. Validation and training
4. Examination
5. Correlation & probation
6. Certification
7. Monitoring

Why should brands and retailers follow this program?

• Expert guidance: Industry experts introduce additional resources and external inputs when developing and implementing the program.
• Flexible and reliable: Training is prepared by industry experts according to customer needs and what’s already in place with multinational brands.
• Continuous monitoring: Regular monitoring ensures that factories are well qualified and maintain good quality standards.
• Increased quality, lower costs: Externalization of training and alignment with vendors aim to shift quality ownership in harmony with brand requirements.
• Neutral partner: An external, neutral agent can intervene as needed with no conflict of interest.
• Complete or partial manager participation: Managers can partake in 100% of the program or only the stages requiring reinforcement.

Interested in learning how API can help your supplier empowerment strategy?