It is important bc
Explanation:
1. Your Performance Is Being Graded
No matter the quality of your company's product, your customers will not buy it if you can't deliver it on time. Very few — if any — companies have the luxury of being late on final product deliveries while simultaneously being able to keep their customers satisfied and coming back for more over the long term. It's essential for your suppliers to keep their end of the deal and deliver materials on time so you can keep your production process on track.
2. Minimize the Bull Whip Effect
The bull whip effect happens when consumer demand for a product changes, prompting companies in a supply chain to order more products to meet the demand. This is important for many reasons. At the heart of it, world-class supply chain leaders understand the value of establishing trust, communicating clearly, and that a foundation of outcome certainty is central to ensuring a lean and efficient supply chain. Working with reliable suppliers minimizes the impact of the bull whip effect on your production processes.
3. The Cost of Unpredictability
Without having the confidence that the necessary materials are going to be on-time, where they need to be and within specs, teams within your organization will end up making ad-hoc, low-information assumptions to compensate for systemic uncertainty caused by your supplier. This results in investing resources in contingency planning activities that do not create direct value for your end customer.
4. Management Distraction
When you’re fighting fires and responding to crises related to late supplier deliveries, you and your team aren’t working on productive endeavors to further your company's or your customers' long-term strategic goals. For today’s high-impact managers, time is the scarcest resource. Investment in steady supplier relationships that minimize firefighting is a high-leverage use of time.
5. On-Time Materials Delivery Is Simply Table Stakes
On the journey to building high productivity and creating valuable relationships with your suppliers, making sure they can consistently deliver materials on time is just the table stakes to get in the door. Conversations that you want your supply chain team to be having with your suppliers, whether about design-for-manufacturing (DFM), improved electronic data interchange (EDI), vendor-managed inventory (VMI) or other higher-level collaboration initiatives, can’t take place until trust is established between the supply chain actors, with each demonstrating their ability to deliver upon their commitments.
