Voices: Other Voices

Choose and Manage Your Automation Suppliers Carefully

How Can We Manage Our Supplier Performance to Achieve Optimum Long-Term Results

By Roy Kok

The technologies we choose have a major impact on our careers and the competitiveness of our companies. With the total cost of ownership being over four times the initial acquisition and installation cost, the choices are much more important than they may at first appear. Making the right choice can end your career or launch it. However, for the company, the choice that is made, even a bad one, will be in place until the end of its useful life.

With leaner engineering departments and changing technologies to choose from, selecting the right solution is an ever-growing challenge. So the question becomes, "What's the best process for making a strategic selection." The follow-up is "How can we manage our supplier performance to achieve optimum long-term results."

First you need to understand that selecting the right technology will require both research and a team effort. You need to clearly define the scope of the project. Have you had a past solution, and why are you considering a change? What are the key benefits you're seeking? Do you want to improve quality? Agility? Performance? Reduce costs? What are the attributes that will make your company more competitive? After all, isn't that the ultimate question?
Selecting the right supplier will require the development of an extensive criteria list. A highly technical solution will typically have over 150 criteria to evaluate. These will fall into one of three categories:

  1. Capabilities – In this category, you are evaluating the current capabilities of the company and its products or services. Are they features you need, and can this company provide them? Does the company have technical support in your region? Is there a local training department? Are parts stored locally.
  2. Presence – In this category, you are evaluating the current stability, growth and penetration of the supplier and its products or services in your context (region and/or industry). Is the company a relevant supplier of this technology or service? Is it successful in my industry? In my region? Is it growing?
  3. Vision – In this category, you are evaluating the alignment of the company with your corporate goals and future vision. Is the candidate company developing technology that you will be using in the future? Is it investing in this technology? Is it supporting future standards? Is it staffing as you want it to to provide the kind of support you will need?

Your evaluation criteria should be straightforward, easily understandable and, ideally, drive a quantitative response. Make sure your question facilitates a scalable result. For example, a question about support personnel could be, "Do you have support personnel in my region?" However, a better question would be "List the support personnel you have in my region and give their history." Creating criteria that prompt yes/no responses do little to help compare one solution to another.

Think as broadly as possible about your selection criteria. Don't forget to include categories for integration with other business systems, long-term ownership and career planning (How will ownership transition to new stakeholders as careers advance? How will new users be brought up to speed?). Don't forget to consider items you will encounter over the life of a system; e.g., upcoming technologies, standards or enhancements to your business practices.

Once you've made your selection and implemented the system, you'll need to move on to supplier performance relationship management (SPRM), and focus on maximizing the benefits of this selection over the lifecycle of the solution.

It is a fact that for strategic and complex technology solutions, the total cost of ownership over the lifecycle of the product is over four times the initial cost of acquisition and implementation. You have service costs, technology upgrades, spare or replacement parts, training, consulting and continued engineering. These are all important categories to consider in making the initial selection, but they are also important areas to manage on an ongoing basis to maximize the benefits of the system and the value derived through your relationship with the supplier.

Here too, a formal process to manage the relationship is critical. When you mention supplier relationship management (SRM), those in the purchasing realm will see it as managing your supply chain. There are many SRM products on the market for that purpose.

In the world of automation, where a strategic selections revolves around a technology such as a distributed control, manufacturing execution or enterprise asset management system, the need is not in managing ongoing deliverables and product quality, but in continually evaluating, managing and improving your service relationship (Figure 1).

Just as with supplier selection, quantifiable criteria are important. You can't improve what you can't measure. and you can't measure something you can't put a number to.

This is an area that ARC Advisory Group sees as underperforming across the industry. This area is better known as supplier performance and relationship management (SPRM). Even the companies that have formal SPRM processes can quickly identify areas that require improvement. These usually involve training and consistency across the organization.

The key to effective supplier performance and relationship management involves three areas:

  1. KPIs – The right items to measure, year over year, to gauge that your relationship and the services provided are healthy and on track.
  2. Process – A regimented and controlled process delivering repeatability, year over year, even with changing personnel or corporate stakeholders.
  3. Scorecard – A simple tool that summarizes the relationship performance and helps to guide constructive discussions that will lead to mutually beneficial results.

Read Also: Of Swiss Cheese, KPIs and Process Safety

The KPIs, when properly defined, enable you to manage one vendor with a single or multi-site deployment and compare multiple vendor performances against each other. The key is to create a framework and process that will enable continuous measurement and continuous improvement. The result will be improved performance, managed costs and maximized adherence to your business objectives (quality, throughput, uptime, etc.).

Many companies implement such programs for supplier selection or supplier management, but in ARC's experience, rarely are they implemented with a degree of consistency or thoroughness that should be expected for such strategic components in the operation of a company. This is an area where improvement can lead to a significant return on investment. 

More from this voice

Title

Bringing the Lincoln Paper Mill Back from the Dead

Lincoln Paper Wasn't Even a Zombie Company. It Was Dead. Closed. Kaput. Then New Owners Brought in Multivariable Testing to Help Resurrect It Through a Top-to-Bottom Revamp of Procedures, Processes and Plant Culture

05/13/2013

Solving the Process Safety Puzzle

Integrated Safety Systems Offer One Solution, but No One-Size-Fits-All Fix Exists

05/07/2013

Process Automation Integrated Systems: A Data-Driven Search for Oil

Integrated Systems Pump Data to Feed the Search for Oil in Alberta

04/08/2013

Fieldbus Is Easy With Portable, Wireless Tools

Why Use Portable Tools? Find Out Its Benefits

04/02/2013

ISA100.11a - Fieldbus Wars Round 2 Begins

To Directly Influence the Outcome of This Dispute, End Users Should Vote With Their Time by Participating in the Appropriate Standards Committees

02/25/2013

The Improved ARC Automation Index

Understand the Current State of Automation Markets and Read an Industry Forecast Based on Variables Such as Investment, Consumer Spending, GDP and Other Economic Indicators

01/28/2013

Wired vs. Wireless

Wireless Is Not the Same as Wired Without the Copper, and Using It to Its Fullest Potential Will Require Innovative Thinking

01/05/2013

Modular Still Matters

The Process Analyzer Industry and One of Its Largest User Communities Must Get Away from Building "Steel Copies of Wooden Bridges"

12/03/2012

Finding Faults in Enterprise Asset Management Systems

Giant Swedish Mine Counts on an Integrated EAM System to Make Fault Reporting and Predictive Maintenance Easier

11/06/2012

Best Practices in High-Performance HMI Design

Having a Solid Foundation to Build On Is Extremely Important, and Having an Enforced Policy That Ensures Compliance Is Just As Important

10/03/2012

What Is the High-Performance HMI?

Operators Learn to Live With Design Flaws and Often Take the Easy Way Out and Live With the Less-Than-Perfect Systems They Grew Up With

08/03/2012

Automation Processes Are Easy to Listen To

We Have More Than 200 Podcasts on Subjects Ranging From the RS-485 Standard to How to Upgrade Your DCS. Listen and Learn

07/31/2012

The Care and Feeding of your Weigh Cells

Load Cells Are Super Accurate, but Finicky. Here Are Some of the Biggest Causes of Problems and How to Avoid Them

07/11/2012

Developing Control System Security Standards

Are There Several Standards in the Area of Control Systems Security?

06/01/2012

The Future of Process Manufacturing

What Are You Going to Do When Your Most Experienced Operator Retires?

04/03/2012

Farewell to Standardization: Wireless and FDI

Will There Be One Standard for Wireless and One Standard for Field Device Integration?

02/06/2012

Your A-Z Guide to Process Automation

Process Automation Is a Little Like Any Travel Destination. Even the Seasoned Traveler Needs Direction, and the Newcomer Always Needs all the Help He or She Can Get

02/02/2012

The iPad Hits the Plant Floor

Companies Like Pfizer Have Reduced Time and Increased Efficiency by Putting Apple's Most Recent Showstopper, the iPad, to Use in Manufacturing

11/09/2011

An Embarrassment of Riches

Checking Out ControlGlobal.com Can Be Rather Like Harvesting a Tomato Patch. There's So Much Good Stuff There--and More Is Added Every Day

10/03/2011

The ControlGlobal Boarding Lounge-The World at Your Fingertips

ControlGlobal.com Offers a World of Process Control Information at the Click of a Mouse

06/06/2011