Tips for Choosing a Long-Term Supply Chain Partner [Cue: Homework Needed]

As a manufacturer, your designs and innovations are only as good as the manufacturing processes that bring them to life. That’s true whether you manufacture hydraulic cylinders as we do, or any other component, assembly, or product.

Excellent supply chain partners are crucial because they help to ensure that your products meet quality standards, are produced efficiently, and can help you continually meet demand. Given the importance of having reliable suppliers, you should choose them only after conducting due diligence yourself or with outside assistance from a business advisor or legal counsel. It is also useful to get recommendations from trusted contacts.

Although a less thorough approach is quicker and less “painful,” rushing things along can result in difficult situations that have adverse, long-term effects on your mental, physical, and financial well-being. Taking the time to develop a group of outstanding manufacturing partners can benefit you in many ways. Those advantages include:

1. Greater Quality Assurance. A reliable manufacturing partner helps to ensure that your products consistently meet specs and quality standards.
   
   
2. Higher Efficiency and Better Cost-Effectiveness. Ideal supply chain partners can help you optimize production processes and reduce lead times, waste, and other factors that can prevent you from maintaining competitive pricing.
   
   
3. Improved Scalability. Dependable partners can increase or decrease production to meet fluctuating demand without compromising on quality.
   
   
4. Value-Added Innovation Support. Supply chain partners often have the expertise and technology to refine and improve your designs, leading to the manufacturing of products that offer significant benefits to customers that you could not provide independently.
   
5. Superior Reliability and Timeliness. Trustworthy partners deliver products on time, which is essential for meeting production deadlines and fulfilling customers’ expectations.
   
   
6. Enhanced Risk Mitigation. Experienced partners can foresee potential production issues and address them proactively, minimizing disruptions to your schedule and those of your customers.
   
   
7. Litigation-Preventing Regulatory Compliance. A strong partner can help to ensure that your products comply with all relevant industry standards, as well as regulations and laws, to help you avoid time-consuming and expensive lawsuits.
   
   
8. Mutually Beneficial Long-Term Partnerships. An ideal supply chain partner is invested in your success and works hard to maintain a collaborative relationship that lasts for years.
   
   
9. Account Management / Ease of Doing Business. Having a partner that has a single point of contact, or an account manager, can make things easy, eliminating multi-channel communications; risks of errors, misinterpretations or misunderstandings; and overall frustration.

Steps for Choosing the Best Supply Chain Partners

When selecting companies to supply you with components, assemblies, or other kinds of products, it is useful to take these actions:

1. Define Your Requirements. State, in writing, your product specifications, quality standards, volume expectations, and budget constraints.
   
   
2. Research Potential Partners. Look for partners with a proven track record in your industry. Seek recommendations and read reviews. With the web, that information is more accessible than ever.
   
   
3. Evaluate Capabilities. Assess the competencies of potential partners, including their equipment, technology, and expertise as they relate to your specific needs.
   
   
4. Visit Facilities. Do everything within reason to get a firsthand look at a potential partner’s operations. The time and money you invest in that activity can provide insight into their operational efficiency, business practices, and organizational culture. Tip: Look for those that have videos or virtual tours on their websites or in their social media posts.
   
   
5. Verify Certifications and Compliance. Ensure that your potential partner has the necessary certifications (e.g., ISO) and complies with relevant industry standards and regulations. If you need to hire outside parties to perform this function, it is an investment of resources that can help you avoid a crisis.
   
   
6. Assess Quality Control Processes. Inquire about the potential partner’s quality control procedures and ask them how they handle challenges such as defects and non-conformities. Their answers should be highly detailed. If they are not, keep “pressing” until you get a satisfactory response.
   
   
7. Review Past Work. Ask for case studies or examples of similar projects they have completed. This step in the selection process can help you gauge your potential partner’s relevant experience and reliability.
   
   
8. Strong Communication Skills and a High Degree of Responsiveness. Evaluate the supplier’s ability to always keep you informed about what’s happening with your account, and in language you can understand. Tip: Look for their account management process, specifically if your partner has multiple locations or you have multiple projects.
   
   
9. Evaluate Financial Stability. Ensure that your prospective manufacturing partner is financially stable and capable of supporting your long-term production needs, so you don’t have to scramble to find a replacement due to unforeseen circumstances.
   
   
10. Negotiate Terms and Agreements. Clearly define the terms of your partnership in writing, and if appropriate use an attorney to draw up the agreement so terms and conditions (T&C) are documented in a contract. T&C should include pricing, lead times, delivery schedules, and intellectual property rights.

Conclusion

By asking the right questions, paying close attention to the answers, taking the time to make an onsite visit, and getting recommendations from industry contacts, you can see if a potential supply chain partner is the right fit. If you believe you can work successfully with the partner, it is critical to have a clearly worded agreement that defines the terms of your relationship.

The extra effort you make to evaluate a potential partner yourself and with outside assistance can increase your probability of creating a mutually beneficial partnership that helps you achieve your strategic business goals. Relationships with supply chain partners can also help you improve the quality of your work environment and strengthen customer loyalty. For first-hand insights into choosing the best supply chain partners...