The Chinese military sage Sun Tzu said: “If an army does not seek out allies, it will be isolated and weak.” Here are some more tips for vehicle manufacturers to turn suppliers into allies based on a couple of decades in roles on both sides of the negotiation table.
1) Source wisely in low-overhead nations
When the cat’s away the mice will play. Many UTV and Motorcycle OEMs and accessory manufacturers have learned the hard way that dealing with a distant stranger can carry plenty of downside along with the upside; therefore trust should be proportional to the familiarity that is established.
The overall rules of thumb for offshoring are as simple as the rules at a traffic light. You’ve got a green light to source catalog items that are not considered intellectual property as long as they are tested to ensure their safety. Envision a yellow light for parts that are one-offs. Although they are similar to components the supplier already makes, these should be treated with caution until a process for doing business, including engineering change orders, is established. Unfortunately there’s a red light staring you in the face when offshoring components and systems that are white-sheet designs or those that require intellectual property protections.
To get the green light with engineered systems you need to base one of your own personnel at the supplier, or have a trusted account management person acting as a liaison with them. Some western corporations have Wholly Foreign-Owned Enterprises in China and other countries. These suppliers can combine seamless access to North American sales and engineering with low-cost manufacturing labor and overhead.
2) Seek technical and big-picture advice
Some companies, like some cowboys, are all hat and no cattle. Therefore engineering should be involved on new programs to ensure that a supplier is technically capable and not just spouting buzzwords and low prices (See Specification for Success – another blog I recently posted).
A visionary who can evaluate the ROI for design tradeoffs at both a project and company level should also be keeping an eye on the process. Sometimes both the technical and the big picture views can come from the same person, but in other cases they are decidedly NOT going to come from the same person. An experienced staff engineer will offer critical best design practices but might be somewhat myopic when it comes to soft sciences such as brand value or next-generation features. A good program manager will be skilled at meeting program cost and timing goals while spotting opportunities for future growth with a supplier. All of these kinds of input should be sought to make the right supplier selection.
3) Get to the root cause of rejected parts
Nothing can be improved unless you start with the truth. Suppliers must be diligent to prevent or mitigate quality problems. Suppliers should take initiative to know more about the application than what is shown in the specifications given to them by the OEM. However, I’ve also seen suppliers take the fall for things that were not their fault. Examples include: OEM assembly line workers installing things incorrectly, “engineers” that were mismatching parts within their systems and simple laziness or overwork driving management to pin the blame on a supplier when it was the OEM that was asleep at the wheel. Like any good troubleshooter the Buyer should understand the root cause before charging parts back to the supplier. A few useful questions include: Are we (the OEM) reporting a problem that the supplier would normally catch during their own testing? Is it possible for assembly to have induced the issue? Does the print have the necessary information to prevent the issue? Pinning the blame incorrectly only makes the problem endure longer.
Supply chain capability can make or break a vehicle manufacturer. Great commodity managers will unlock this powerful resource.
Powersports consultant Gary Gustafson develops custom market research including M&A analysis and entry strategy for suppliers looking to grow in the motorcycle industry. He also manages Powersports OEM account management for a Motorcycle LED headlight manufacturer and an ATV OEM starter motor and winch component manufacturer among others. Learn more about new business development opportunities for suppliers and world-class supply chain solutions for OEMs by visiting www.gforceconsulting.com.