Managing Your Global Vendors The Three Pillars of Success.

Transcription

1 Managing Your Global Vendors The Three Pillars of Success

2 In today s socially connected world, there is no room for error. A small mistake or hiccup could turn into a full-blown crisis once customers and other stakeholders take to social media. And if the blunder is serious enough, it could be the end of your business even if you re not directly responsible. However, if you properly manage your vendors from day one, issues can often be avoided, or at the very least mitigated, before they do any harm. Nearly every retailer and brand sources goods or services from a third party overseas, and there can be a lot of risk involved. This includes: Unintentional harm to your company such as late or incomplete delivery of goods or use of dangerous materials or product features. Intentional harm to your company such as design or material theft, counterfeiting, transshipments or substitution of components. Corporate Social Responsibility issues including unfair labor, child or forced labor, worker safety, harm to the environment and much more. Potential risks can be reduced and even eliminated by properly onboarding vendors, establishing Standards and Terms of Engagements, conducting authorizations and assessments, providing training, tracking vendor performance with a Score Card Index and issuing and managing Corrective Action Plans (CAPs) when issues arise. Given the physical distance and differing views on socially acceptable ideals, managing global vendors is one of the most difficult tasks that companies face. Yet, vendor management is also one of the most important tasks companies face because your reputation and success or failure -- hinges on it. But without the proper tools in place, this can be a daunting task. The right technology can help enforce control and accountability for all suppliers, vendors, and other third parties involved in the design, manufacturing and delivery of your product to ensure compliance, avoid costly litigation, reduce downstream risks and costs of non-compliance, and win market share by building and maintaining a positive public image. The Three Pillars to Successfully Managing Vendors: When it comes to managing global vendors, there are three main pillars you should put in place to achieve success. Proper management of these areas will safeguard your business when working with global vendors. These pillars include: 1. Proper Vendor Onboarding 2. Good Manufacturing Practices (GMP) 3. Vendor Corporate & Social Responsibility

3 Pillar One: Proper Vendor Onboarding Every vendor should be closely managed from the onset of the relationship; this begins with the vendor onboarding process. If expectations and procedures are established before any work commences, many issues can be avoided. First and foremost, you should begin by vetting and evaluating vendors before even issuing a sample request. This includes educating vendors on your company s Standards and Terms of Engagement. Once the vendor understands what s expected of them, you should schedule an on-site assessment to examine the facilities and assess the working conditions to establish that they comply with your Standards of Vendor Engagement. At this point, all necessary documentation and certifications should also be obtained. These, as well as all other pertinent details about the vendor, such as capabilities, machinery, capacity, etc., should be stored together to create a comprehensive vendor profile. During the initial evaluation process, if an issue arises and the vendor doesn t meet the Standards and Terms of Engagement, a Corrective Action Plan (CAP) should be issued immediately. Once the issue or issues have been resolved, the vendor can be cleared to work on production orders. Likewise, throughout your relationship with the vendor, report cards should be kept to calculate a Score Card Index based on established performance metrics. These findings can be used in the future when assessing and comparing vendors. All of this information should be stored and managed in a centralized location for quick reference and assistance in vendor profiling when making sourcing decisions. This data should be searchable and standardized across vendors. An investment on your part in the proper onboarding of your long-term vendors is an investment in your future, as well as the stability and future of your vendor. This means: Taking the time to put Standards and Terms of Engagement in place. Putting solid training programs in place so everyone is on the same page. Investing in technology to properly and efficiently manage the overall onboarding process.

4 Pillar Two: Good Manufacturing Practices (GMP) Good Manufacturing Practices (GMP) are typically associated with quality assurance ensuring products are consistently produced and controlled to the quality standards appropriate for their intended use. However, GMP audits also help ensure the long-term health of the vendors you work with. In the apparel and fashion industry, some things to consider when vetting your vendors is to make sure they have enough financing, structured training programs, quality control mechanisms, continuous investment in new technology, and all of the other intangibles that make sure they will be in business for the long-term. For these purposes, consider evaluating the following key areas: Management commitment and continual improvement Is the vendor s management team stable or is there a high rate of turnover? Is management committed to their own continual improvement and the improvement of employees and the facilities? Risk management What systems and processes does the vendor have in place to evaluate the potential risks associated with various tasks, jobs, etc.? Quality management systems Does the vendor have systems and processes in place for quality control? Do these systems meet your standards? Site and facilities management Are the facilities properly managed? Are facilities and working conditions safe and healthy for workers? Product control Does the vendor hold raw materials and finished products to the same standards that you do? What is the process for performing product control audits? Personnel training and competency Are personnel properly trained to do their jobs? Do they receive ongoing training and are there plans in place to address improvement needs? When onboarding new vendors, you invest a lot of time, money and effort. After this long, arduous process, if the vendor goes out of business, that investment is worthless. Even worse, if they go bankrupt while your work is in production, you could lose substantial amounts of revenue and profit.

5 Pillar Three: Vendor Corporate Social Responsibility In 1996, Kathie Lee s brand and personal image were shattered when a labor activist group uncovered that teenage child laborers in Honduras were producing the TV personality s Wal-Mart clothing line. Initially, Lee denied the claims but after a series of highly publicized congressional hearings, the damage was done Kathie Lee s clothing line did not survive. In order to manage such complexities, you must create and implement Corporate Social Responsibility (CSR) practices and initiatives. Beyond child labor, there are an array of vendor compliance issues related to fair labor, anti-corrupting, safety and responsible sourcing that you must manage when contracting with global factories and suppliers. Your vendor s behavior indirectly represents you, and it can make or break a brand s reputation and viability. By instituting a strict CSR program and setting expectations that comply with those initiatives, you can avoid the situation Kathie Lee faced in Managing the Three Pillars The Role of Technology Vendor evaluation and onboarding are nearly impossible to manage with a manual system of , spreadsheets and attached documents. This is where a technology solution, in particular a Vendor Compliance solution, comes into play to help onboard, organize, vet and manage your vendors in a systematic, efficient way to assist in making better sourcing decisions, ensure overall compliance, and mitigate any potential risk before it becomes the next trending topic on social media. That said, not all Vendor Compliance solutions are created equal. How To Extract Maximum Value from a Vendor Compliance Solution As you evaluate your options, look for a solution designed to support the unique requirements of companies in the fashion industry. Furthermore, a good Vendor Compliance solution should offer fast implementation, with global accessibility and multi-lingual capability, as well as local training support to assist with the rollout of your global solution. Vendor Compliance solutions allow you to not only streamline your processes, but improve the onboarding and ongoing management of your global vendors to ensure immediate, and future, compliance. After all, the goal of a vendor compliance program is to safeguard your company, and with the right solution in place, you can do just that.

6 Below is a list of features to look for when evaluating Vendor Compliance solutions. Vendor Compliance Solution Checklist Can be implemented quickly Intuitive to navigate, easy for users to learn Fast Implementation & Training Industry specific -- requires no customization Ongoing maintenance and support provided Easy integration with other systems within current solution landscape Global Accessibility Cloud-based, accessible anytime, anywhere Multi-lingual support Centralized location for all communications, including updates and alerts Provides standardization of processes for uniformity Eliminates data entry records Process Improvements Automates control Eliminates subjectivity -- ability to attach photos to validate findings Associate calendars with alerts and notifications to ensure timely execution of processes Offers a tablet app for on-site assessments that work online & offline for use in areas with bad internet connectivity -- upload data when ready On-The-Fly Reporting Granular Security Improved Vendor Management Immediate access to reports on performance, trends, defects, efficiency, etc. Eliminate hours consolidating data for analysis Supports security rights at the business, division, field and role levels Ability to allow access to 3rd parties with restricitons based on user-defined security Streamlines and standardizes the process for onboarding new vendors Easily sort/filter vendors based on specified criteria - make better sourcing decisions Issues and manages Corrective Action Plans (CAPs) Generates supplier scorecards based on performance metrics

7 How NGC Can Help NGC s cloud-based Andromeda Vendor Compliance solution offers all of the features listed above, and more. Take responsibility for the management of your global vendors today, not only to protect your company s reputation, but also to provide a solid foundation for long-term vendor relationships. For more information about Andromeda Vendor Compliance, schedule a demo. About NGC NGC Software powers the Connected Enterprise for retailers and brand owners with the Andromeda cloud platform, including solutions for product lifecycle management (PLM), supply chain management (SCM), apparel ERP, shop floor control, global quality control, and vendor on-boarding and compliance. NGC customers include Billabong, Canada Goose, Carter s, Destination XL, Foot Locker, Nicole Miller, Rocky Brands, Spanx, Sport Obermeyer, VF Corporation, Williamson-Dickie and many others. NGC has offices in Miami, New York, Los Angeles, China, India, Mexico, and El Salvador and is a wholly owned subsidiary of American Software Inc. (NASDAQ: AMSWA), named one of the 100 Most Trustworthy Companies in America by Forbes. For more information, visit NW 79th Court Miami Lakes, FL 33016