Believe it or not, identifying potential supply partners isn’t as easy as one might think. Some might even say there’s an art to it. But ahead of any sourcing decision a procurement professional must identify and qualify a potential supply base. This could be an existing supply base used by an organization or a totally new set of potential supply partners. Either way, identification is the first step in the process.
As a rule of thumb, when identifying potential supply partners, you should have the program requirements in mind since these are what drive the identification phase. Typical program needs to consider include, but aren’t limited: to capabilities, manufacturing locations, industry, quality and secondary operations.
While cost remains critical in any sourcing activity, don’t let it cloud your judgement; if cost is driving the conversation, then you’re already starting the wrong way. Before identifying a potential supply partner, a sourcing professional must have a well though-out identification process that ensures the following considerations are met and the results meet company goals.
5 Considerations When Identifying Potential Supply Partners
When considering the capabilities of a potential supply partner, evaluate every offering the company provides or has the capacity to provide. Always ask, “Is this potential supply partner capable to meet all my business needs, and then some, without the risk of problems during prototype runs or production?” Below are a few common, yet critical questions to ask regarding the capabilities of any supply partner in consideration for a program.
Which services do they offer and specialize in?
There are many different types of capabilities for a given component or module. It’s important to understand the many processes a potential supply partner can offer and what they’re good at. The best suppliers will tell you exactly what they specialize in and what they won’t do, which isn’t just helpful for your understanding, but also it may save on total program costs down the road. Value-add services are especially important to understand. Can the potential supply partner finish machine, inspect and test the casted part entirely in house? Or, will that have to be identified separately? This adds layers or additional hands to the equation, and the more areas involved, the more room there is for error.
What materials does the potential supply partner work with and what can they suggest?
All sorts of materials are used in manufacturing – from plastics to alloys, to highly customized materials like carbon fiber – so it’s important to identify a supply partner that knows the ins and outs of the materials you’re requesting. A truly knowledgeable supplier will understand your requested material and also recommend or provide alternative choices based on your product design requirements. Many projects or products will be designed in other areas of the world and will kick off development builds in those regions with the end goal to have production sourced in another region. In this scenario, it’s always helpful to identify a partner who understands material equivalents (EN, SAE, etc.) and can suggest options more readily available in the production region.
What design capability does the potential supply partner have?
It’s one thing to take a prototype through production, but what if you require design services? Not all suppliers offer these services or perform them well. Ask each potential partner you’re considering whether they can work based on a drawing (digital or printed), translate the drawings to shop drawings, and if they’re capable of starting from scratch without the help of an initial design provided by you. You’ll want to identify design capabilities early on to maximize your team’s resources.
2. Manufacturing Locations
Today, OEM’s often require certain content to be sourced domestically, which means to move forward in qualifying a potential supply base you must first identify capable domestic or local supply partners that could manufacture the part or parts in question. This is also a great way to eliminate potential suppliers if they don’t manufacture in your desired location.
As part of the identification phase, keep the industry at the top of your mind. If your program requirements are for Aerospace or Defense, then the identification of a potential supply base becomes more limited than, say, an automotive program. Your identification criteria become more focused and makes identification and qualification more efficient.
Know the program’s quality requirements before you start sourcing. You should only choose a supply partner that’s suited for the desired quality requirements. Ask the companies you’re identifying about their knowledge as it relates to industry codes, certifications and regulations. For automotive companies, being knowledgeable, experienced and certified in various ISO/TS standards is recommended, and in many cases required. ITAR is a common certification for the defense industry. These quality requirements and certifications should be weeded out during the identification phase leaving you with a qualified supply base going forward.
5. Secondary Operations
It’s a good practice to always inquire about specific secondary operations offered by the potential supply partner. Some programs will require simple fabricated parts and others full, finished and tested assemblies. Do yourself a favor and ask these important questions: Can this supply partner finish machine the assembly, to print, or will they have to send out a portion of these services? Can they clean the part to your company cleanliness spec? Can they assemble the rivets and fasteners required to make it an assembled finished good? Can they do leak testing or conduct additional testing required by your company before final shipping? Identifying and understanding a supplier’s secondary services ahead of time will help prevent a major headache down the road.
The identification phase is arguably the most important during sourcing because it kicks off the entire process, and therefore, makes for a smooth or bumpy road. Understanding the capabilities, manufacturing locations, industry, quality and secondary services of a potential supply partner is an absolute must for making a sourcing decision. Don’t let costs be the only driver during this phase of the sourcing process. Keeping the above considerations in mind will set your company up for short and long-term success.