Controlling OEM suppliers

Deals with the way in which a number of companies across different business sectors deal with the problem of effective control of their vendors. As manufacturing based companies continue to reduce their cost base, moving progressively down the value chain, and in the process increasing their dependency on their supplier base, cost-effective control becomes an urgent requirement in an ever-increasing competitive market. At the high tech end of the spectrum of electronic and equipment manufacturing, price performance is now a major product differentiator. The need to reduce costs has produced tighter supplier controls and the development of increasingly more sophisticated cost monitoring systems. The development of accurate cost-of-ownership models provides an important step forward in the control of the supplier base. It is conceivable that, in future, sophisticated cost-of-ownership models will be used not only to monitor and control suppliers, but also as part of the contractual terms and conditions to provide a cost recovery mechanism in the case of poor supplier performance.<>