4 Traits to Look for in Supply Partners

4 Things to Look for in a Supply Partner

Every supplier is unique in their own way; however it’s the ones that share the following supply partner traits that make them best-in-class, and separate them from the competition.

Financial Stability

When choosing a supplier, or supply partners as we prefer, you want to be certain they are financially inept and will be around long enough to supply your organization. This goes without saying, but so many times this simple requirement gets overlooked by buyers and sourcing decision makers. Many a time does a supplier get sourced due to an urgent need, and, although this may cure that short-term fix, it could lead to a long-term supply disaster for your company.

If the economy goes south, which will statistically happen again, or your new supplier runs into issues you will find yourself in the same predicament, as before. The whole crisis could have been averted if you gave this a harder look before sourcing. In some cases, unforeseen circumstances occur and there is not much you, as a buyer, can do to predict which suppliers are or will become financial unstable, but you can and should move quickly to mitigate the impact when it happens.

Always be sure to do your due diligence and ask the right financial audit questions before entering into a contract with a potential supplier. It will save you valuable time and money in the long-term.

Technical Mastery

Second, you always want to be sure that your potential supplier has the technical capability and the team that it takes to get your job done. I cannot tell you how many times in my years of Procurement I have seen a supplier sourced that ends up having no clue how to perform the task or is just technically incapable of executing the scope of  work in the purchase order.

This second trait may seen like common knowledge as well, but external factors such as a supplier’s interest in winning the business, pressure from the OEM and a multitude of other outside factors can lead to a supplier over-committing to an agreement in order to win the business.

Everyone, and I mean everyone, sources a bad partner at some point, but this can be one of the simplest issues to avoid from the beginning. Typically new suppliers want to impress you and will do everything in their power to win new business. Sometimes, this means side-stepping the truth or misleading you on their technical capabilities and skills. Be careful to test them out and question them on their technical know-how, upfront.

True supply partners, who have the capability to perform the task technically, will jump at the opportunity to show you what they can do. If you have a potential supplier who does not jump at this opportunity, then that should be a big red flag to you that they do not have the technical capacity you require for the project. Don’t skim over this important technical capability due diligence step because the implications could be catastrophic to your company and it could damage your product, and even worse, your customer.

Partnership Mindset

Always source a business that is looking to be in a long-term partnership with you, as opposed to just supplying your organization. This goes for everything from a widget to auto insurance, low to high volume, anything and everything. I cannot stress this point enough. In fact, many companies and suppliers talk about building partnerships, long term partnerships, and building strategic partnerships only minutes later to focus on cost reductions for the program at hand.

Locating and building true partnerships takes time, investment, information sharing and commitment to a long term mutually beneficial relationship. This approach will not only be beneficial to you but it will also make your potential supply partner comfortable with working with you. In any partnership, you want the other to succeed, along with yourself. And, more importantly, you cannot succeed without your partner. This is how you should approach all of your sourcing exercises. Look for that business that is willing to go the extra mile for you, as you would for them.

Entering into a partnership with your supply partner will ensure success throughout the entire relationship and will prosper into many future opportunities, benefiting both parties along the way. View sourcing a supply partner as you would a life partner. Would you choose someone who is constantly causing you heartache and is making you an, overall, lesser person? I didn’t think so.

Continuous Improvement

Don’t choose a dead-end supplier. A dead-end supplier is one that is not your partner, only focuses on supplying you their current item/component/service, and that never offers any advice or expertise on opportunities to improve current and future operations. In essence, all they care about is the present and not the future. You want to select a supply partner that presents ideas and opportunities that are mutually beneficial to the both of you. This could range from a process or design change, to a new supply partner recommendation or shipment consolidation. You are very busy and you want a partner that not only works with you, but also works for you. You should always enter into a contract with a partner where the understanding, from the beginning, is: I, as a company, will be getting better year after year in large part due to the fact that you are getting better year after year. Again, this is beneficial to both parties and any best-in-class supply partners will jump at the opportunity to continuously improve.

Always remember these 4 traits when sourcing a potential supply partner.