Why sourcing partners are key to supply chain reliability?

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Supply chain professionals collaborate with other business partners for reliability

Success in the supply chain across metrics is best achieved through partnerships. Companies in all industries can leverage the power of strategic partnerships to access expertise, reduce costs, and shorten market lead time. We will see how a sourcing partner, in particular, can create an innovative and reliable supply chain.

ONE ORGANIZATION CAN’T KNOW IT ALL

One of the reasons many businesses struggle to develop a reliable supply chain is their inability to partner with other organizations with shared goals. This is often the product of a legacy mindset and tendency to keep knowledge behind closed doors, obsolete and all.

Even some of the world’s biggest conglomerates with massive resources at hand now recognize that knowledge partners are critical. Coca-Cola for one, admits that partnerships are essential. “We are a soft drinks company so we can’t do it all on our own,” they explained. “We need expertise around sustainability and making a difference in the field.”

For manufacturing, this is even more relevant. While some organizations may have a preference for keeping their sourcing projects in-house, partnering with components manufacturers will provide access to talent and expertise that companies simply can’t grow internally at short notice.

Peter Senge, the founder of the Society for Organizational Learning, once used an example when driving a point about learning: “No business knows what Oxfam knows about the plight of farmers or what WWF knows about biodiversity and watersheds,” he said. “The best businesses don’t just hire the sharpest people; they also keep expanding their expertise by partnering with NGOs that have deeper and broader knowledge.”

PROFIT FROM EACH OTHER’S UNIQUE EXPERIENCE

While sourcing or a research challenge may seem unique to a particular organization, it’s highly likely that the challenge has been faced – and overcome – by other companies in the past. A company looking to address packaging cost improvement, for example, may not know where to start, but packaging specialists from other industries will have been through the journey many times before and can, therefore, bring their superior experience to the table.

Components manufacturers may also be able to point out areas of concern that your organization has missed. To illustrate an example from a Europe-based manufacturer: the company was looking for ways to reduce manufacturing cost in its gas sensors factories. However, they soon learned that another component manufacturer’s better economy of scale can produce their sensors lower than their current cost and can cut its logistics cost by half. This company decided to subcontract and consign its production equipment, thus extending the useful life-cycle of its assets. This move freed up more manufacturing space for new product lines at their Europe site.

REDUCE TIME-TO-MARKET

Many components manufacturers have agile, dedicated engineering and R&D teams that can cater to fast product development projects. Take the case of a French company looking for partners to manufacture its redesigned high voltage relays to make them more competitive in the European market. After a brief exchange of design drawings, the components manufacturer agreed to produce the relays at a lower cost and simplify the material sourcing and logistics route using its own sourcing infrastructure – all in a time-frame that is less than the time it takes for a normal reliability test program. All they needed was the right partner half across the globe.

So when you meet a small-sized manufacturing company, resist the temptation to dismiss those who don’t fit your expectations. It pays to listen and see if that is a potential partner material.

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