Look at the numbers when choosing vendors.
9/22/2003
They used to be called suppliers; now we call them strategic partners. In today's fast-paced, profit-pressured environments, companies are increasingly tailoring their execution strategies around the capabilities of vendorsnot simply meeting a delivery truck at the dock. But as vendor-customer relationships become more complex, performing due diligence before the partnership is essential. Using factual examples and fictional cases, Ostring emphasizes the obvious but sometimes overlooked importance of examining the financial soundness of potential vendors prior to entering a business relationship. The author, a manager of business analysis at Nokia, recommends that supply chain executives and operations managers study quantitative data such as income statements, balance sheets, and cash flow to evaluate a company's financial health and longevity. Qualitative factors are also discussed since the corporate environment, strategy, management philosophy, and ownership have an impact on business success as well. Uncovering information about suppliers and securing corporate knowledge prior to forming an alliance can help boost your bottom line productivity and results.