In the first part of this article series, “Are You Sure Your Supplier is Financial Stable and Healthy?” we talked about ways to evaluate your suppliers to ensure they are financially sound and will be there when you need them. The information provides OEMs with a relevant checklist of items and how-tos to make sure their suppliers are stable and healthy, now and well into the future.
In this second part, we talk about other key attributes product manufacturers can evaluate to ensure their suppliers are able to meet their manufacturing needs in the new normal – during and post COVID-19.
COVID-19 Rocks the Supply Chain Boat
Things change. Manufacturers could not have planned for the COVID-19 crisis. No doubt, it has revealed weak links in the supply chain. But what you learn from this crisis can make a difference in your success.
Things within the supply chain will continue to evolve during and after the coronavirus pandemic. What better time to evaluate your suppliers’ resiliency than during a pandemic.
Thinking about the following attributes will allow you to evaluate and determine if you are partnering with the best suppliers. Understanding the important factors behind these business attributes will enable you to steady what may be a rocky COVID-19 supply chain boat.
Supplier Attributes to Evaluate
|Attribute||Why its Worth Investigating|
|How have your suppliers shown resiliency (or lack of) in being able to weather the unexpected COVID-19 crisis?||A supplier who engages and walks closely through the pandemic with their customers, view hardships as opportunities. If you look closely, you will likely see this in everything they do. Look for information about the supplier that speaks to “being there” for others during tough times. Pay attention to the way they think and the solutions they propose. Without intentionally looking for this, how would you know a supplier has your best interest in mind?|
|How flexible is your supplier when it comes to adjusting to your unexpected business needs?||A supplier that shows flexibility and is able to adjust workflow understands the changing needs of their customers are sometimes out of their control. A smart supplier will keep the current and future needs of customers and industries top-of-mind, by considering ways to adjust its business plan and operations. The supplier will also strive to be innovative by creating solutions to problems as they present themselves.|
|Do your suppliers have reliable sources for their material needs required for your products?||Suppliers who source their material needs from China or elsewhere outside the U.S. are facing sourcing challenges as the coronavirus pandemic dominoes. A savvy supplier relies on multiple material sources to ensure they can meet their customers’ needs. They also secure domestic material sources to protect against international trade and shipping issues.|
|Do your suppliers foster long-term relationships with their suppliers?||Repercussions of COVID-19 are bringing to light several issues in the supply chain. Suppliers realize how important it is to not only build strong relationships with their customers, but also take time to build strong and healthy relationships with their own suppliers. Suppliers who have strong relationships with their own suppliers are more likely able to be flexible when they need to be.|
|Duplicate Services at Multiple Locations|
|Do your suppliers offer the same services at multiple locations?||Suppliers that offer duplicate services at different locations, add another layer of protection from unexpected events that can stop production. These suppliers are more likely to be able to serve you during troubled times, like now.|
|Responses to Unforeseen Changes|
|How does your supplier react when you need to make changes to your forecast, or put an existing order on hold?||If your product is used in the fight against COVID-19, your orders have likely doubled or tripled, compared to your original forecast. If it your product is not essential, you had to put production on hold because of a shutdown. A smart supplier knows things change. It builds in allowances for potential changes and utilizes formal processes to adjust their capacities. They will work with you to meet your changing needs. Even if that means accommodating your exponential growth overnight! A successful supplier will retain customers because it goes out of its way to help them survive their own challenges.|
|New Product Development|
|How does your supplier react when you need to delay a new project?||We now know a pandemic will cause needed adjustments in operations. This may include putting anticipated projects on hold. A valuable supplier will want to know why you put the project on hold and offer suggestions, such as involving their engineering staff to help with project adjustments because you had to cut your team during the pandemic. A concerned supplier will offer insight and options to help you reduce costs or redesign the components needed to help you launch your product sooner then later. If you selected your supplier on piece part price alone, you may not have the benefit of additional help when times get tough.|
What unexpected benefits can a U.S. supplier offer that an overseas supplier cannot?
|If you source offshore, you may have had trouble with your supplier delivering components during border closings from the pandemic. A competitive U.S. supplier will show customers clear gaps in offshoring (not only those occurring from COVID-19), and the expected ROI when reshoring.
Benefits you may not expect to receive when choosing to reshore your product manufacturing, include:
· Shorter lead-times
· Lower Freight costs
· Ship and receive when borders are closed
· Ability to support your local, state and national security
· Ability to create jobs, strengthen the American people by providing others opportunities to achieve financial success and support the U.S. economy
Get Ahead of Your Competition
What can you do to assure your supply chain is as strong as it can be to put your company in the best competitive position and grow your market share?
- Use the items highlighted above to conduct an open-minded and fair assessment of each of your suppliers.
- Identify the attributes most important to you and your business to determine if your current suppliers are meeting your supply chain needs of today.
Use your findings to determine if it is time to shop for a new supplier.
- As an OEM design engineer or component buyer, step back to look at the big picture when choosing a manufacturing supplier. It is risky to make decisions based on the lowest price without considering other crucial criteria that can affect your success in the ever-changing supply chain world.
Think about doing things differently. Grab a different ore and give yourself the opportunity to work with innovative manufacturing suppliers to create industry-disruptive solutions for your product needs that put you ahead of your competition. Make sure you are doing your part to stop your supply chain boat from rocking.
By Steve Schabel, Chief Sales and Marketing Officer, Alexandria Industries.
Alexandria Industries is a multifaceted manufacturing supplier. We use advanced technology and a skilled workforce to create extruded aluminum products, precision machining, heatsinks, finishing, plastic injection and foam molding, welding and assemblies.