Getting your parts made faster often means that you can either get your prototypes in your hands faster or your products to market faster. And that means you've got to make 100% sure your suppliers are the right fit for you.
Pretty easy, right?
Err ... maybe.
There's a lot that goes into the equation, from effective buyer/supplier communication to a supplier's manufacturing capabilities and how well a supplier can meet shifting customer demand. Working with buyers and contract manufacturers every day has shown us that, well, sometimes it's good to get a refresher on some best tips and practices...
In this post, we'll show you 3 ways to go about sizing up your suppliers and figuring out if they're actually getting your parts to you as fast as they can -- without you having to do too much extra work.
Oh, and make sure to stick around and download your FREE supplier evaluation tools at the end of the post.
Is Anybody There? Building Effective (And Open) Lines of Communication
We talk a lot about effective buyer/supplier communication in our recent blog post, "Wanna Reduce Part Costs? These 3 Tips Will Definitely Help ...", so we won't spend a lot of time on it here. But we do want to cover several key points:
1.) Regularity and Consistency: The biggest benefit of communicating with your suppliers on a regular and consistent basis is that doing so helps set expectations for your suppliers (which is a crucial step in ensuring your part in manufactured correctly). It seems rather obvious, but you'd be surprised how many buyers and suppliers skip this crucial step...
What's more, regular and consistent communication also means that you can remain aware of any changes in your suppliers' manufacturing capabilities and capacities, helping you better prepare for any potential production hiccups.
2.) Have an Agenda: Although simple, many buyers and suppliers of custom manufactured parts seem to also skip this important communications step. Often, they don't prepare for their communications before hand, leading to confusion for both parties -- and potentially leading to inaccuracies in the end-products. So ... mitigate the posibility of confusion (and the potentially costly retooling and manufacturing inaccuracies that come out of that confusion) by sticking to an agenda when and wherever possible.
3.) Establish Crisis Communications Channels: In the event your supplier runs into a manufacturing roadblock (or some crazy act of nature wipes out your supplier's manufacturing facilities), there are two BIG things to think about: A.) How will your supplier contact you? and B.) When will he contact you?
Establishing dedicated crisis communication channels in advance of getting your parts made can alleviate any unforeseen hurdles in the manufacturing process. And by setting up preferred channels of communication (whether it's an email to your corporate account or a call to your personal cell phone), it's important to give your supplier all the necessary tools to reach you up front.
RELATED: The Importance of On-Time Delivery
How's Your Supplier Stack Up? Measuring Supplier Capability
Supplier capability is one of the BIGGEST (and maybe most obvious) factors that contributes to the speed at which you receive your parts. Not fully understanding the manufacturing capabilities of either potential or incumbent suppliers can lead to lost capital, extended leads times or, most importantly, subpar part and product quality ...
And of course, all of these variables can keep you from getting your parts on time. In the worst case scenarios, rework due to substandard work from incapable suppliers can take months to rectify. Months you probably don't have.
So what are some ways to measure supplier capability?
The first step in evaluating supplier capability is determining an incumbent or potential supplier's "process-based" capability. Generally, "process-based" capabilities measure the ability of a specific manufacturing process, such as machining or injection molding, to meet specific output parameters. Measuring a supplier's "process-based" capabilities allows you to better understand the output and production capacities of a single shop as a whole.
The second step in evaluating supplier capability is determining an incumbent or potential supplier's "performance-based" capability. This type of capability refers to the human element of the manufacturing process. At this stage of the evaluation process, variables such as employee experience, supplier certification, and manufacturing speed are the variables to meticulously examine. The following is an example of a typical "performance-based" grading system.
Some of this information (such as years of experience) can be found through a simple audit of a supplier's website. However, you can sometimes have to get granular and schedule an in-person meeting at the supplier's facilities (where applicable) to get a first hand look at the shop in action.
Of course, if you're sourcing overseas, that's probably not an option. If that's the case for you, leveraging manufacturer directories, manufacturing marketplaces like MFG (which has highly detailed ratings for many of its supplier members), or other buyer testimonials is where you should start ...
Can They Handle the Load? Accurately Analyzing Your Supplier's Capacity
In it's most generic definition, capacity is a supplier's ability to accurately meet demand within a set timeframe. And as you know, a shop's capacity often shifts with demand, season, and capability, among other things. So, analyzing your supplier's capacity on a regular basis (at least once a year for incumbent suppliers and maybe 2-3 times per year for new suppliers) is highly recommended.
And with all the hats you already wear as a sourcing pro, capacity manager probably isn't one you're dying to try on. It can be a big job. But if you take it one step at a time, it can be relatively easy to manage supplier capacity on a micro level. The following are some suggestions on how to do that:
- MRPs: Although typically for larger organizations and procurement teams, an MRP is a material resource planning guide to help you efficiently manage your inventory in relation to your supplier's manufacturing capacities. You can formulate your own MRP of sorts relatively easily, even if you're a one-man team. Here's a simple template to get you started.
- Capacity Analysis Worksheets:Capacity analysis refers to the "evaluation of a factory, production process, or machine to determine its maximum output rate." Here's a template that Ford Motor Company uses to measure their suppliers' capacity.
- Value Stream Mapping: VSM is a lean manufacturing strategy that can be used by sourcing pros to evaluate and reconfigure supply chains when gaps are discovered in areas like supplier efficiency. It is the measurement of a system from beginning to end, analyzing each step in the sourcing process. Here's a quick overview of how to efficiently develop a measureable value stream.
Each of these methods can effectively mitigate (although not necessarily eliminate) hurdles in the parts manufacturing and delivery process as it relates to supplier capacity... But there's one more thing...
Supplier Robustness and Agility (But What Does That Mean?)
Here, it's probably appropriate to pause and quickly talk about how procurement professionals look at their supply chains (and how you can take a few cues from 'em). Often, procurement pros and parts purchasers look closely at supplier robustness and agility. But what does that mean? In the sense we're talking about, robustness means a supplier's overall ability to stabilize their manufacturing process and produce parts and products reliably. While agility refers to a manufacturer's ability to withstand increased and often shifting customer demand.
These two qualities are important because:
Both agility and robustness show to be important in improving [supplier] performance. While agility has a strong positive effect only on supply chain performance, but not directly on business performance, robustness has a strong positive effect on both performance dimensions. -- Copenhagen Business School
So what does that have to do with capacity? Well, when a supplier experiences a crisis (such as losing a machine or a critical team member), their capacity obviously takes a hit. However, the more robust and agile a supplier is, the more likely that supplier will quickly rebound, mitigating capacity shrinkage.
And no. There really isn't a worksheet for measuring supplier robustness and agility (we really wish there was ...). But there are two things we know for sure can guide you in the right direction, especially when looking to source new suppliers: Supplier ratings and customer testimonials. Both can give you a really good idea of a supplier's work and performance history.
So, What's Next?
Man, that's A LOT of information to digest. But don't worry, here's a quick roadmap to get you started:
- Start with communications. Efficient buyer/supplier communication is the foundation upon which you'll build your evaluation strategy. Focus on regularity and consistency first. Then, the other two steps (and those mentioned in our other blog) will slide into place much, much easier.
- Next, evaluate supplier capability. Here, we suggest beginning small and starting with "process-based" capabilities. Does your contract manufacturer have the right machines for the job? And are those machines maintained properly? Then move into "performance-based" evaluation. Is you supplier getting the most out of his machines? Is your supplier the most knowledgeable resource for the process you're using?
- Finally, look at supplier capacity. Although we talk about MRPs, unless you're a bigger company, they don't typically make sense for capacity evaluation. Instead, focus on Capacity Analysis Worksheets and Value Stream Mapping. Both can be easily scaled for your specific needs and don't always require input from a team or managers.
So, while we can't 100% gurantee these steps will get your parts made faster, following these steps will greatly increase your chances of finding, connecting with, and sourcing only those contract manufacturers and job shops that can get your parts to you in the fastest timeframe possible.
And of course, if you ever feel the itch to learn more about how to get your parts made faster -- or how to find expert suppliers who can -- MFG's team of world-class sourcing advisors is never more than an email or phone call away...
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