August 2001 | Commentary | Supply Chain Technology

Inventory Trendspotting: Qualifying Suppliers Online

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One common way to identify emerging technology trends is to follow the trails of strategic partnerships between companies. While these agreements often result in the implementation of a new technology, at the very least they can enhance a technology that in turn augments a service to some customer within the supply chain.

One such partnership is particularly intriguing. ThreeCore Inc., Danvers, Mass., a third-party procurement firm, recently entered an alliance with Cleveland, Ohio-based SupplierInsight, an independent online source for supplier ratings and qualifications.

The agreement illustrates an important trend: a move away from offline support toward fulfilling and supporting critical supplier information online. The quest for real-time data and the extension of supplier sources are driving companies to make decisions online.

"The most critical materials a manufacturer purchases are its custom direct materials. The greatest value a supply chain services company can bring to its clients is an in-depth knowledge of qualified suppliers," says Thomas W. Petersen, CEO and president of ThreeCore. "The only way to get this information is by actively visiting and auditing suppliers regularly. No software product or Internet solution can substitute for information gathered during an on-site visit."

Checking References

SupplierInsight provides an invaluable portion of this process: customer reference checking. Its rigorous methodology helps ThreeCore determine how well a supplier meets customer expectations. "This data represents one of the essential elements in our clients' supplier selection process," adds Petersen.

SupplierInsight uses its patent-pending rating system to provide solutions that help buyers, sellers, and exchanges qualify their suppliers. Its online system—SupplierSeal—can be displayed on private and independent exchanges and on the supplier's web site. The system gives users the opportunity to connect the right suppliers to the right buyers, based on reliability, responsiveness, and robustness—factors that go beyond simple price parameters.

Petersen takes a contemporary view of where the procurement business is headed. "The future of procurement will mirror the path taken in the logistics field," he predicts. "Fifteen years ago, companies had in-house departments to manage their logistics function. Today, thousands of companies rely on third-party logistics providers that blend marketplace knowledge, expert processes, and specialized software to improve their clients' costs, quality, and responsiveness."

Manufacturing companies are just starting to realize the benefits of a supply chain service provider that delivers similar benefits to their procurement function.

Historically, procurement consulting was the exclusive domain of large multinational manufacturers.

"ThreeCore is unique because its audited supply base allows it to deliver procurement services at a cost point accessible to both small and mid-sized organizations," says Petersen.

ThreeCore's services function as a series of connected activities, each with its own concentration. They are specifically designed to find, estimate, source, and manage custom direct materials, with the goal of reducing total cost.

Here's a look at each service:

Find is a service that helps specialists identify qualified suppliers by specification clarification, availability, and capacity confirmation. The specialists make their choices from a global and audited supply base. Suppliers must pass an annual on-site audit and other qualifying specifications to become part of the database.

Estimate combines a user's own drivers and specifications with their base to establish a guaranteed cost-saving estimate. ThreeCore's Market Estimate system delivers proposals for products such as sheet metal, precision machining and electro-mechanical parts.

Source acts as an independent negotiator to help keep costs down. ThreeCore oversees production contracts and asks the chosen suppliers for bids on the procurement.

Manage, ThreeCore's inventory management system, allows suppliers to manage their particular materials at the user's own facility. This includes replenishing stock and automatically adjusting production to match the user's flow rate.

ThreeCore concentrates on specific markets for its services: contract manufacturing, semiconductor, aerospace, telecommunications, medical devices, and other high-tech manufacturing.

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