December 25, 2015 / best practices, Cost Management, industry news, LIT, operator training, optimization, strategic planning, supplier relationships, supply chain
In today’s competitive marketplace, it is tempting to base supplier relationships on price. Yes, quality is always a consideration, but cost typically makes or breaks the deal. However, a growing number of manufacturers are starting to place more value on their supply chain by focusing less on price and more on building strategic partnerships that offer long-term benefits.
In fact, supply chains are expected to be “a key value driver” for engineering and manufacturing companies over the next 10 years, according to the report, Building the World: Engineering & Manufacturing 2025+ from DHL Customer Solutions & Innovation. Specifically, the report says that manufacturing leaders will understand the importance of collaboration and will create new supply chain concepts to differentiate themselves in the market and stay competitive. For example, some companies may build regionalized supply chains to better adapt to shifts in economic activity.
Big name companies like Cargill, Coca-Cola, and Amcor Asia-Pacific are already establishing more collaborative supplier relationships, and they are seeing results. A case study on Bob Evans Farms and Gordon Food Services (GFS) featured here in Supply Chain Quarterly provides a great example. For the last four years, Bob Evans and GFS have been working to jointly identify and actualize opportunities for profit growth through the use of cross-functional teams. So far, the financial benefits have exceeded $31 million dollars, according to the article.
Forges and other industrial metal-cutting organizations can take a similar approach with their supply chains. While smaller operations may not have the time or resources to adopt the in-depth methodology utilized by Bob Evans and GFS, there are some simple ways forges can position their supply chain to bring more value. A new eBook from the LENOX Institute of Technology provides four strategies managers can use to build more value into their supplier partnerships:
- Schedule on-site visits. Expect your prospective supplier to assume a “partner” role from day one by focusing more on service than on the sale of the product. To facilitate this relationship, start by asking for an on-site needs assessment. This gives you the opportunity to discuss your business goals in person, as well as providing the vendor with a full overview of your operation.
- Do your homework on supplier claims. While many companies often promise unmatched service and technical support, the key is to look for companies that provide resource allocation metrics that support their claims. Do they have adequate field coverage? What is the tenure and continuity of their support team?
- Include training in your purchase agreement. Most suppliers should be willing to provide some level of value-add training as part of the purchase agreement. This is especially important when it comes to your equipment and tooling providers. No one knows your production equipment better than the people who designed it, and they should be willing to share that expertise with you.
- Expect thought leadership and self-service tools. Industry-leading partners should be able to support your business by providing informational and educational materials, as well as practical tools and services. You can and should rely on your supplier to be an industry thought leader that provides a steady stream of valuable industry trends data, operational strategies, and technical product information.
Ultimately, the goal is to build a relationship that benefits both you and your suppliers. How can you create more of a win-win relationship with your supply chain?
To read more about the benefits of value-added supplier relationships, including some key areas where suppliers can help, download the eBook, Five Performance-Boosting Best Practices for Your Industrial Metal-Cutting Organization, or check out the white paper, Managing Your Blade Manufacturer Relationship.