There are actions available to most buyers that will surely lead to better supplier relationships.
A Dell Computer executive dealt with the issue of “what your suppliers really think of you and what you can do about it” in a recent webinar. Proficient Sourcing helps buyers seeking new custom manufacturing sources. “Commitment to Utilization” was one webinar point that has particular application for these circumstances.
It is wise to keep in mind that with a growing economy, job shops are generally busier than in the recent past. This means new work (yours) is competing with existing (and paying!) customers. If you give prospective suppliers reasons to be excited about your opportunity, obviously you will get better responses.
When a potential supplier believes the buyer has a commitment to use the supplier, there is a good start towards a strong relationship. This commitment can be demonstrated by providing prospective suppliers with more information about the environment associated with the work to be quoted. While confidentiality issues prevent disclosure of some things, we suggest consideration of several categories when soliciting new suppliers.
- What is the future for the item (or items) for which the RFQ is generated? Is this a startup situation? New product? Replacement of existing supplier? It would help the prospective supplier if some indication was given about the future. An example might be “quantities for this item could grow significantly within 2-3 years”, or “this item is part of a mature product, and future quantities are expected to be stable”. Even if the item is a one-off, some supplies we deal with specialize in that space (see #4 below)!
- Occasionally situations have occurred where a specific quantity of parts was quoted, and the supplier candidate won the business. Later the supplier discovered the item was subject to a very erratic demand schedule, with some requirements many times that of others. This does not need to be a surprise, and if it is, problems can occur. It should be possible to include some comments in the RFQ that deliveries are to be expected on some specific frequency, and quantity variations of some estimated amount can be anticipated. It is a good idea to remember that all suppliers strive to keep their production equipment busy, and the more they can do that the happier they are.
- Is there a PPAP or other extensive qualification process involved? This is especially relevant if required material purchases are significant and the leadtime from first article submission to sale revenue is great. If this is the case, we suggest a detailed conversation with the prospective supplier as early as possible. This is another case where that discussion might involve the buying company purchasing the material, at least initially.
- Most of the suppliers we deal with take new business with an expectation that excellent performance can lead to increased business opportunities with the buying company. With that in mind, buyers who add information about future opportunities might find better RFQ responses. For example, the RFQ might state that the item being quoted is one of several things that could be considered with good supplier performance. Or it is a one-time thing, which might attract a quote from a supplier with only temporary available capacity.
- Paperwork has become a problem early in a relationship in a few cases. One of the discussion points in the webinar had to do with suppliers visiting the buyer’s facility, and paperwork is a subject that would be an excellent one for such a visit. In our experience the buyer’s company is usually far larger than the supplier, and probably has established procedures for labeling parts and packaging. There may even be a need for special labeling due to multiple departments receiving shipments before use. Many small companies are not sensitive to such circumstances, and seeing the facility helps the supplier candidate understand why such administrative requirements exist.
Finding a new supplier is usually a difficult task with risks on both sides. When a buyer requests a quote from a new prospective supplier, it is wise to keep in mind that that new supplier has an existing customer base that provides most of their revenue. The buyer’s new requirement must fit within the available capacity of that supplier, which might change very soon. Asking about available capacity over the near future might salvage an excellent supplier not available today, but would be within a short time.
When the prospective supplier is well informed about the buyer’s circumstances there is a better chance of the buyer becoming a “customer of choice” and the supplier being a better fit.