Save Money, Build Trust and Shorten Lead Times – (Part 1 of a Series)

June 16, 2014

In the past few years, as manufacturing jobs have declined, demand for manufactured goods has remained high. This has left many manufacturers understaffed and overwhelmed, yet they have ever-growing pressure to spend wisely.

We’ve discovered opportunities where you can save money and time, while building trust with your suppliers. If you’re looking to save money, purchasing is a good starting point. The typical practice of gathering multiple bids and choosing a supplier based solely on low price is actually costing manufacturers money in numerous ways:

1. Purchasing agents and managers have more responsibilities and less time for them than in the past. Many spend far too much time placing orders, consuming valuable lead time and increasing project cost and risk. We see companies spending three times more money internally on just placing an order than the project itself should cost.
2. High turnover rates among purchasing staff can cost big money. As staff changes, the knowledge of supplier strengths gets lost, so purchasers routinely request numerous bids, even from suppliers that may not fit the project.
3. Lack of project information inflates prices as suppliers try to estimate for “unknowns.” Qualifying the quoting opportunities and establishing qualifying criteria can produce more accurate, competitive and timely bids.
4. Repeatedly ordering small quantities while expecting low prices will increase your costs. Small-quantity orders may not seem to justify buying tooling, but we’ve seen companies continue to order this way, essentially paying for the tooling many times over, yet never owning the tooling.
5. Short due dates are extremely expensive. Often, when purchasers request bids from numerous suppliers they don’t know well enough, and have multiple unknowns in their project requirements, they wait too long to place an order. Why pay unnecessary overtime, expediting and other expenses?

We understand the pressure is high to “go with the low quote” – however, this may not consider the full cost of a project or the high risk of a mistake.

Qualify Your Suppliers Upfront

Narrow your list of potential suppliers so you can develop deeper relationships with each one. By qualifying your suppliers upfront, you can save valuable time knowing their strengths and capabilities. This will reduce purchasing inefficiencies. For every project, it’s critical to ask these questions:

• Does your project fit the supplier? Closely examine the expertise in your supplier’s shop, from engineering and tool making experience to continuous improvement mindset.
• Are they capable of doing a great job? Select suppliers who are always improving, growing and investing in new technologies like training of their people, simulation software, quick-change set-ups and latest equipment.
• Do you trust them to do it right and at a fair price? Select suppliers with experience and expertise who truly help you spend your money wisely, get the most from your design, engineering and production, minimize your risk and provide high-value solutions.
• Can they make it better? Select suppliers who will provide feedback, challenge your thinking to improve your product or process, watch for potential pitfalls, offer savings suggestions and ideas for continuous improvement.

We’ve found that with this open communication and trust, we can create a win-win relationship for everyone involved in the business. It’s key if you want to produce products on time, under budget and within quality requirements.

As one client told us: “I’m looking for experts who will challenge us on our parts design, take the time to truly understand the function of the part and provide us with manufacturing solutions we’ll be able to assemble efficiently.” That client has worked with Wisconsin Metal Parts since 1997. You can see examples of how we’ve helped clients save money in metal stamping, sheet metal fabrication, CNC machining and EDM projects.

In our next blog, we’ll look at how you can save money and build vendor trust through the design and engineering process.