MFG.com Blog

Best Practices for Selecting a Manufacturer

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In the context of globalization and empowering sourcing with technology, it’s easier and easier to discover suppliers that were previously out of reach. However, the risks associated with venturing into uncharted territories can be significant. The consequences of choosing the wrong supplier or manufacturer can wreck your chances of maintaining a successful business.
 
In a recent MFG.com survey, sourcing professionals indicated that 76.1% of their purchases are recurring.  Dealing with the right supplier from the get-go, helps reduce the risks of poor quality goods or delivery problems and can lead to significant savings in the long run.
 
Online & Offline Reputation
A company’s reputation will give you an overall idea of what kind of partnership you can expect to have with a manufacturer.  Online marketplaces and e-procurement tools, such as MFG.com and LiveSource, provide detailed information and customer ratings, based on quality, responsiveness and delivery.
 
Client testimonials are essential, but go beyond reading them on the supplier’s website.  Ask for direct contact information for one of their previous customers and have an actual conversation with them.  Look up additional information about the supplier such as: ratings with the Better Business Bureau, press releases and information about the company’s affiliation to different professional organizations.
 
If the manufacturer you choose sub-contracts some of the work, make sure you go through a similar process with their sub-contractors. After all, being directly or indirectly associated with the wrong company can seriously affect your company’s reputation as well.
 
Quality & Performance
Just because a manufacturer has the right equipment and capabilities, doesn’t necessarily mean that they will be able to deliver the products you need, on time and in accordance with all of your requirements.  Make sure the company you choose has previous experience manufacturing products similar to yours and can meet your tolerances, material specification, finishing and packaging requirements.  Although certifications aren’t always required, a certified manufacturer is more likely to deliver a higher quality product.
 
Cost & Documentation
Keep your options open and always request more than one quote on each project.  Competition is a major motivational factor for manufacturers. Buyers that requested multiple quotes through the MFG.com marketplace have seen savings of over 30%. Even if you are currently have a long-term partnership with a supplier, make sure you always stay up-to-date with current market pricing and costs.
 
This doesn’t mean that you should always be looking for the lowest cost no matter what.  Quality still needs to be a big concern. And beware of hidden fees such as shipping, packaging, or fuel surcharges, which can significantly decrease your profitability.  In a survey conducted by MFG.com, 49.5% of sourcing professionals surveyed, indicated concerns that logistics and shipping costs could threaten their sourcing or supply chain strategies. Make sure you take into consideration all these costs and do the math before selecting your manufacturer.
 
Adjust the payment and shipping terms according to each manufacturer your deal with.  Consider your history with that company, their credit worthiness and the overall cost of the project.  Make sure everything is in writing and that you have proper documentation to protect your finances and intellectual property in case there are any issues.
 
Innovation & Efficiency
Your ability to be competitive depends a lot on your supply chain efficiency.  Make sure the manufacturers you work with are up to speed with the latest technology and equipment. Try to choose suppliers that can contribute with innovative ideas that will reduce lead time, decrease cost and help you stay ahead of your competitors.
 
Obtaining all this information up front will make you a savvy sourcing professional and will contribute to your success.  The MFG.com sourcing advisers are always available to help you with your sourcing needs and to answer any questions about best practices for choosing a manufacturer.

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