Product launches are hectic. Resources get strained, timelines compressed, and minor mistakes will have greater consequences than under typical circumstances. Normal sourcing strategies will be challenged, and alternative methods must be explored to drive product launch success, which is especially true when your new product is relatively low volume, as you won’t have the same leverage over supply capacity that a high-volume player would enjoy.
For instance, a small custom vehicle OEM will have more difficulty leaning on their suppliers for support as compared to one of the Big Three, which can easily broker favorable treatment with suppliers given their spend in the marketplace; however, this doesn’t mean low-volume producers can’t be nimble and successfully launch their product under a constrained resource scenario. Below are six key strategies that must be explored to help mitigate low-volume sourcing challenges encountered during a product launch.
6 Tips for Tackling Low-Volume Sourcing Challenges
1. Develop Strong Relationships with Local Suppliers
When your program is facing a tight deadline, it’s important to have a network of trustworthy, quick-turn local suppliers that’ll be flexible and keep you and your build team moving. A great example of this is a product launch that requires custom metal fabrication where the fabrication scope can’t be finalized until assembly when exact dimensions and orientations are confirmed. Once design is confirmed, sending it to new suppliers can cost precious time. By leveraging a local supplier that can take fabrication designs hot off the press and deliver fabricated parts in 24 hours or less will keep your team moving quickly instead of sitting idle waiting for parts to be delivered.
2. Select Off-the-Shelf Parts Instead of Custom
As deadlines approach and more pieces of the puzzle come together, sourcing flexibility becomes paramount. Inevitably, suppliers that you planned on using shut down for an unexpected reason or have internal problems that prevent them from delivering components as planned. In this scenario, if the component being sourced is custom, then you’ll have great difficulty finding an alternative supplier in short order. But, if the necessary part is off-the-shelf instead of custom, you can simply source from an alternative supplier to mitigate any delays that might occur. To take advantage of this strategy, review your bill of materials to identify components that could use off-the-shelf parts rather than custom ones.
3. Set Up Flexible Payment Terms with Suppliers Ahead of Time
In a product launch scenario that requires speed of component delivery, separating the act of delivery with payment is critical. In many cases shipment of parts or components starts when payment is issued. While speed of payment has reduced significantly in recent times, depending on the magnitude of payment and your relationships with suppliers, a simple payment can take a few days to finally process to trigger a shipment. By establishing payment terms and a good reputation with your suppliers prior to part delivery, you may separate the act of payment from actual part delivery. This will create options to quick-ship parts on an account that allows for payment later and allows for more time to review and verify payments without delaying part delivery.
4. Explore Design Changes that Reduce Time to Market
When there’s a time crunch to get to market, finding the path of least resistance is key. One area to look closely at is potential design changes that could reduce manufacture or assembly time. When new products are in the design process, the tendency is to develop many bespoke product attributes that make it unique in the marketplace. While having characteristics that separate your product from those of competitors is critical to success, there’s a level of diminishing returns. In a product launch scenario, it’s important to understand which bespoke characteristics are nice to have and which ones are must haves. And with a resource constrained product launch, eliminating some of the nice-to-have characteristics can reduce assembly time. Afterall, just because these attributes aren’t in the launch of the product, doesn’t mean they can’t be incorporated into subsequent design revisions.
5. Explore Multiple Sourcing Paths at One Time
When launching a new product, it’s vital to take steps to reduce your supply disruption risk because even a small disruption can have a significant impact. One easy way to reduce your risk is by sourcing key components from multiple suppliers. This will allow you to lean on one supplier over another in the event of a supply disruption or underperformance. Furthermore, dual sourcing allows you to make cost trade-offs and mitigate expedite fees by playing suppliers off each other and allocating sourcing volume as you see fit.
6. Make Plans to Control Your Own Destiny
While having a trusted supply base to help you launch your program is necessary for success, steps should be taken to put your team in the driver seat. By controlling your own destiny, you can pivot quickly and solve problems to meet your standards, not your suppliers’. You can also make sure that serious issues are solved quickly and don’t take a back seat to competing interests at your suppliers. At the end of the day if your product launch isn’t successful, blaming your suppliers will get you nowhere. It’s your program and your responsibility to ensure its success.