Your suppliers may be a low cost path to ongoing and effective innovation. Here’s a quote from a thought provoking article from the Procurement Leaders 8/26/14 blog: “Properly managed and incentivized by procurement, suppliers can be a great source of innovation. In fact, in some companies, supplier-initiated innovation happens regularly through such things as suggested design alternatives, alternative manufacturing approaches, even ideas on streamlining internal processes.”
If you are fortunate enough to have such a supplier relationship, you may experience innovation more economical than internal R&D departments and engineering initiatives. But how do you discover such a supplier, and then encourage such a comprehensive partnership?
Such a supplier is obviously interested in a long term relationship, and in our opinion need to be motivated to help customers with innovations. All to often in our experience the customer displays a “not invented here’ attitude, and appears to be solely interested in price along with prompt delivery. Such attitudes often soften with time, but it puzzles us why buyer companies do not extend a more expansive hand from the beginning. We believe it will pay dividends.
Proficient Sourcing helps buyers find new suppliers for the manufacture of parts and assemblies in metals and plastics. (Please go here for further information) Most of these situations involve a search for a NEW supplier, and consideration of long term factors are probably well down the list of criteria used by the buyer seeking a supplier.
However, acquiring a really good supplier can be a major triumph for the buyer. And one ingredient of most good suppliers is willingness to innovate; they’ll likely do it anyway in order to improve costs. After all, in short order the supplier will be the real expert in the manufacture of your parts and assemblies.
Any good manufacturing company will continuously examine processes in order to reduce costs, improve quality—in other words behave exactly as you would want. Your task is to develop a relationship so that these improvements are shared.
Establishing an innovative relationship will require time. However, there are things you can do immediately to increase your understanding of the company bidding on your requirement. In addition to obtaining a glimpse of the potential for innovations, you can surely begin to gauge willingness to cooperate with you via sharing initial information that goes beyond price and delivery.
We at Proficient Sourcing have long advocated buyers consider including additional information to prospective suppliers. Among the types of information would be these:
- Is the RFQ a one-off or a probable repeat situation? In particular, if the initial inquiry is successful is there the possibility of doing parts that fit together and doing the assembly? See the accompanying capability article for an example of a company that you might miss unless you consider revealing future possibilities.
- Are there additional items similar to the item being quoted that might be available to supply at some point in the future?
If you ignore these factors at first, and choose solely on the basis of cost of the first article, you may miss working with a more appropriate supplier down the road.
- If expensive, exotic, or rare materials are involved, would the buyer consider supplying the material?
- What capacity might you need if the there is aggressive growth in the future? Your first choice based only on price may be overwhelmed later on.
Obviously these are factors some would be reluctant to reveal initially for a number of reasons. We at the supplier end understand such an attitude, especially in a highly competitive environment.
A supplier temporarily at or near capacity will not be particularly interested in bidding on mysterious new work. Likewise, a company in which the new work would compete for machine time with a big customer’s work will also be less interested in bidding. Yet, these suppliers may well be the very best candidates available, since they already have considerable skill and experience with the very type of work the buyer is seeking. In these cases the 2 sides may never meet.
So we recommend you consider adding “incentive” information to your RFQ’s whenever possible. Give candidates a glimpse into a bigger future—if there is one.