This issue, Aaron Johnson, Accumold, explains how to maintain a competitive edge while adding new vendors.
When it comes to supply chain management, finding and adding new suppliers can be daunting. The traditional costs and risks associated with bringing on a new supplier can be real and for those of us trying to get things done, this can stifle progress. Thankfully, it doesn’t have to be this way. Over the years, we’ve collected three big keys to make this process smooth and to leverage it as a competitive advantage.
1. Leveraging supplier knowledge
In most large organizations there is a concentrated effort to reduce the numbers of suppliers in their system. Your team has likely gone back and forth on what makes one vendor more valuable than another, making decisions cloudy and uncertain. We’ve discovered a great strategy is simply to leverage the most knowledgeable person on your team – the potential supplier! It might sound unorthodox, but most suppliers would jump at the chance to visit a potential customer. They are fully capable of giving everyone deeper understanding giving the purchasing managers an opportunity to see the value too. You’d be hard pressed to find a supplier that wouldn’t travel to close a big project.
Some organizations even have a structure where R&D or engineering can source their own suppliers, especially if it’s something specialized. This can be a fantastic opportunity for all involved as long as you are up front and honest on expectations with this potential supplier. Assuming the seller’s business isn’t just prototyping, make sure to help your potential new supplier understand how to navigate your organization for the long-term of the project. Establishing a trustworthy relationship at the points is key, which leads us to the second key.
2. Leverage the first impression
Every supplier wants to steer the conversation about capability and, of course, your buying team will want to obsess about price, leaving engineers stuck in the middle. Avoid your price obsession as much as possible however. If you are looking to add a supplier, chances are this means the service is not already in your database and that there is a special nature to this purchase, therefore the deal will eventually be less about price and more about capability.
Our experience indicates the most important aspect in these arrangements is trust, which comes through relationships. Sure, if you’re buying commodity widgets from the lowest supplier, order online and be done. However, if you’re looking for a special partner for a critical component that will be the next generation life of the company… get to know the supplier and avoid souring the relationship you will need, which leads us to the third and most important key…
3. Leverage the relationship
The most obvious factor when bringing on a new supplier is to ensure they have the capability, scalability and sustainably your company needs for the future, but what is often overlooked is to ensure you want to be around them in the first place!
Make sure to walk them through your plant and see if they work well with your team. The lone seller and buyer scenarios are rare these days. Today it’s about team selling and team buying.
Every sales seminar that teaches supplier sellers how to penetrate organization buying structures is juxtaposed with a seminar for purchasing managers on how to avoid the traps of a good salesman. It’s a reality of business. Each one must work in the best interests of their own company, yet somehow, you need each other to survive. Both the buyers and sellers need to remember a new relationship is like a first date.
Pushy suppliers, drowning in their organizations Kool-Aid aren’t shy about how wonderful their product or service might be, but you won’t share that view, at first. Trust however, will ensure that time comes as the process flourishes.
And buyers will need to remember they’re probably not going to get the price they want out of the gate either. Deals like this have two sides and beating up someone on price is a great way to lose a great partner. New relationships come with a measure of risk and as the relationship strengthens so will the understanding,
At the end of the day we all have tasks to accomplish, but we need each other to be successful. Finding that right supplier can be difficult, but it can be very rewarding in the long run when you leverage supplier knowledge and nurture a real authentic relationship. Win-win does exist and it’s in the form of suppliers who become an extension of your team.