Typically, when you have a product to sell, the company leaders will focus on selling it since that is what generates revenue. However, sales represents only one end of the supply chain, and it’s not necessarily the most complex.
Finding the right mix of vendors and manufacturing partners — called sourcing — and keeping them productive and happy takes time, skill and forethought.
Sourcing For Competitive Advantage
Before leaping to the methods of sourcing properly, it is important to understand why this supply chain mix is significant. Your sourcing strategy and manufacturing mix is directly related to the competitive advantage and overall success of your organization. A company’s flexibility and resilience to market changes is the primary factor in its long-term accomplishment. For a manufacturing company to be flexible, the businesses at the lower end of the supply chain also need to have flexibility and the ability to shift in a global market. Look for suppliers that have multiple avenues for raw materials and are able to adjust quickly to change. Analyze their track record and see how they have managed in times good and bad.
Managing The Supply Chain
Many manufacturers have multiple supply chains that take expertise to manage. Using seal manufacturer Apple Rubber as a case study, they are both manufacturers of o-rings and suppliers, so they have two related supply chains to manage. To do this, they have adopted a technology-friendly, one-stop mindset. Not all suppliers are able to do everything that you need. Although Apple Rubber offers in-house design assistance and warehousing, you may need to find several different companies in order to fully develop one part of your supply chain. Manufacturers will often need a raw material vendor, a design partner and a warehouse partner for one component of the manufacturing process. When pulling together this many pieces, use the technology available to help. If you are a small business, a good supply chain management program can be the difference between success and failure.
Manufacturing In A Global Market
There are some good reasons to use foreign vendors. There are equally good reasons to stay domestic. The most successful companies use both and understand the benefits and pitfalls of each. When choosing resource partners, it is important to think of the entire supply chain, following similar decision making processes throughout. Outsourcing, insourcing, reshoring and manufacturing sourcing are the same things at different places in the supply chain. To understand the global nature of this decision, look at the geopolitical environment of the proposed vendors. Verify that there are no tax, import or export restrictions as well as quota limits. On the domestic side, look for municipal incentives for using local vendors.
Build A Relationship
Your supply chain can be thought of as a bunch of useful relationships, each of which is designed to better your business. This means that fostering these relationships will enhance your company and drive it closer to success. There are certain simple rules for creating a solid relationship. Guidelines like paying on time and invoicing properly go without saying. For supply chain relationships, the rules of marriage apply well. Communication is the key. If you are going to be late on a payment, need more materials or are going to change any terms, communicate this to your vendors. Find at least one person in each company that you can speak with in a friendly manner and bounce ideas off them to synergize both companies’ success.