It can easily be said, ‘a manufacturer is only as good as its last supplier’. 
 
Suppliers, and by extension supplier networks form the proverbial heart of any manufacturing business. How smooth and efficiently it operates, determines the final manufacturing outcome. Sometimes, procurement costs make up 60-80% of production costs for manufacturing projects. 
 
While the amount of money involved is significant, little is being done to improve the state of affairs of suppliers, especially smaller SMEs who are largely impacted. Most SMEs struggle to balance capacity utilization, working capital management, quality improvements and business growth.
 
Costs, quality, on-time delivery and improvements are all shared goals of the manufacturer-supplier relationships. However, most associations are one-off and there is hardly any concern for long term enablement and development of the suppliers base. Manufacturers move from supplier to supplier for even identical requirements owing to cost and time pressures.
 
Let us look at 5 strategies that suppliers can adopt to bring about significant shifts in their business and financial outcomes.
 
Be proactive
Partner with the manufacturer early. Understanding the manufacturer’s requirement, parts identification, quality and delivery time metrics are key to being proactive. Take charge to initiate clear lines of communication and request for documentation on order specifics. Sometimes an order has multiple parts requirement. Know the manufacturer’s priorities and expectation on each to better plan and meet the fulfilment.
 
Use ‘data’ for decision making and reporting
Suppliers, for want of investment and legacy, have often ignored data in how they operate. A good record-keeping of parts and costs, downstream raw material and base sourcing details, capacity utilization, multiple order processing status, order critical components prioritization, shipment status enable suppliers in better decision making. 
 
For e.g.  If a manufacturer has 3 components requirements as part of a single order, can the supplier ask the manufacturer if differentiated dates for finishing and delivery works for them. This was capacity can be better utilized.
 
Suppliers can work with manufacturers to adopt ‘data systems’ and provide for better transparency to self and the manufacturer. It need not be ad hoc, gut based decisions anymore.
 
Augment project management capabilities
A good ‘data system’ can be coupled with improved project management capabilities and specially so for slightly larger suppliers. Investment in project management tools, hiring good project managers and being process oriented goes a long way in improving both manufacturing outcomes as well as meeting financial goals. Knowing, when to source raw material (outflow of money), at what rates to source, for a delivery that is 5 months down the lane can help improve cash positions and credit availability.
 
Adopt technology
Making some of the changes as mentioned in the prior points are relatively easier. With mobile penetration, internet connectivity and SaaS applications, many information technology solutions are now easily available on pay-per-use basis, without much hassle. Record keeping, project management, accounting, financial planning, GANTT systems, delivery status reports and needs across the operations and planning spectrum are all systems that could be adopted to be more structured in approach.

Embrace innovation
Suppliers must also move from a pure linear capacity growth from strict lines of business to looking at being more agile in meeting needs of the manufacturer/ markets. Constant improvement is quality can be a great starting point to win premium business orders. Innovation can also come in processes. Being open to new product lines, working in partnerships with manufacturers and other agencies can help move from one level to the next.

Improving supplier performance is an ongoing process. It requires long term commitment, while small improvements happen on the way to significant advantages.
A good manufacturing partner such as Zetwerk can enable suppliers navigate through the above 5 strategies and make them part of a suppliers DNA. 

Get the Zetwerk Advantage
Partnering with us is a smart move. We work with a global network of clients, and employ in-house experts equipped with proprietary tools to ensure a steady pace of orders and better work efficiency for you.
 

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