How to establish long term partnership with suppliers

supply chain management services

As the core task of supplier management, the maintenance of customer relationship brings direct or potential advantages to sourcing enterprises by promoting open exchanges between the two sides and avoiding many potential problems. For example, when an enterprise makes an urgent request of increased quantity of supply or early deliveries to the supplier, its demands …

As the core task of supplier management, the maintenance of customer relationship brings direct or potential advantages to sourcing enterprises by promoting open exchanges between the two sides and avoiding many potential problems.

For example, when an enterprise makes an urgent request of increased quantity of supply or early deliveries to the supplier, its demands can easily be met with a solid purchaser-supplier relationship that shortens the negotiation between the parties, simplifies the problems and settles disputes with little hindrance.

Based on LKKER SCM’s years of experience in managing 3,000+ supplier partners, we would like to share with you the following key approaches in building favorable purchaser-supplier relationship.

1. Build mutual trust and maintain business confidentiality

The purchaser must maintain strict confidentiality of all costs, techniques and performance of the supplier. Any disclosure of a supplier’s information to another supplier will soon be learnt by the supplier, which will undermine the long-term relationship between the supplier and the supply management company.

It is of great importance to enter into a mutual confidentiality agreement with the supplier in the early stage of establishing a partnership.

2. Conduct strategic cooperation and consultation with supplier executives

The executives of the purchaser should meet with its counterparts in the key suppliers on a regular basis to discuss the strategic cooperation objectives in the long run.

Many Fortune 500 companies such as Caterpillar, Intel, and Toyota regularly hold such meetings with key suppliers, during which managers of both sides discuss market trends, potential expansion plans, long-term technical issues and future investment plans.

3. Focus on end user

Each party in the supply chain should be aware that they are serving the common end consumer, which leads to a common core.

Honda told all its suppliers of parts and raw materials that they are contributing to the manufacturing of each Honda. All suppliers, regardless of where they are in the supply chain, have the same core.

4. Carry out satisfaction surveys on suppliers on a regular basis

To collect feedback from suppliers and inquire about the communication with the purchaser, the attitude towards purchaser-supplier relationship, the accuracy of information communication, the punctuality of payment, the equality of status and the possibility of exposure to new opportunities, especially in terms of payment through a questionnaire.

Late payment will undoubtedly give the supplier a bad impression and may cause financial problems to the supplier, which will affect its ability to pay the downstream supplier or fulfill a contract, and ultimately influence the entire supply chain of the enterprise.

5. Deliver pertinent training for suppliers

Some supply management companies provide training opportunities for their suppliers to improve their quality of products and processes. This is an investment in supplier performance and also in the relationship between the two sides.

For example, some of the largest Korean companies, such as LG Electronics and Samsung, offer their suppliers training courses covering leadership, solutions and computer aided conceptual design (CACD).

Case Sharing: How does Caterpillar build a good relationship with suppliers?

Caterpillar regards suppliers as a key part in its business operation and value chain. It has set up a global sourcing center dedicated to the formulation and development of supplier strategies, as well as selection of suppliers, demonstrating the great importance it has attached to the selection and development of suppliers. Caterpillar has developed a set of selection criteria for suppliers, namely the QCLDM, where Q stands for Quality, C stands for cost, L stands for logistics, D stands for development, i.e., the ability to develop, and M stands for management. Caterpillar evaluates its suppliers from the five aspects of QCLDM.

Caterpillar not only selects, but also helps and supports its suppliers. In Caterpillar, whether a Chinese supplier is to be selected as China-based matching supplier or a global supplier is determined by a variety of factors such as the products, management and cost and quality of the supplier. At present, Caterpillar has 300+ suppliers in China, most of whom are local suppliers, and some are foreign suppliers drawn to China with the expansion of Caterpillar. For example, some Japanese suppliers have invested and developed in China after following Caterpillar into China.

No company has invested such a large amount of resources to support and develop suppliers in China like Caterpillar. Such support has also earned Caterpillar the highest praise among suppliers. With the help of Caterpillar, many suppliers have grown into global suppliers of Caterpillar from scratch, and some are even included into the Harvard Business School Cases.

 

Caterpillar has established a Caterpillar Supplier Park specialized in excavators in Xuzhou to construct a comprehensive supporting network. A competitive and efficient supply chain system will be an indispensable part of the future competitiveness of an enterprise. The building of an efficient and integrated supplier system, including information flow, logistics and integration is vital to enterprises, especially if their production capacity reaches a certain extent.

Product failures often stem from supply chain ignorance

Product failures often stem from supply chain ignorance

The first thing that came to the mind of many at the mention of the supply chain would be logistics, transportation, loading and unloading. After a great deal of explanation, the response I got was, “Oh, we have a new term for express delivery?” “Well, I still don’t quite understand what supply chain is.”   …

The first thing that came to the mind of many at the mention of the supply chain would be logistics, transportation, loading and unloading. After a great deal of explanation, the response I got was,
“Oh, we have a new term for express delivery?”
“Well, I still don’t quite understand what supply chain is.”
 

Today, I am going to discuss with you what “supply chain” actually does. Before we begin, take a moment to picture what supply chain is to you.

First of all, what is supply chain?

Wikipedia says: In commerce, supply chain management (SCM), the management of the flow of goods and services, involves the movement and storage of raw materials, of work-in-process inventory, and of finished goods from point of origin to point of consumption. 

Don’t worry if the explanation doesn’t make any sense to you. The article I wrote today is to explain the supply chain management service of our company in simple words.

 

Let’s take a look at the 12 major production processes of a product.

When we need mobile phones, computers, remote controls, washing machines and other things that we can’t live without, we would turn to Target and Amazon. But has it occurred to you how these products are produced, put on store shelves and the e-commerce store before purchased by you?

If you dig deeper, you are getting closer to what our company is doing, in the technical term, “product supply chain”.

Before a product is produced, it will undergo 12 production processes: product definition, strategy analysis, appearance design, software and hardware R&D, mechanical design, feasibility evaluation, prototype making, supplier matching, mold design and making, pilot production, testing and certification, production and supply. After the product is launched, there are another two important processes: channel integration and product marketing.

LKKER SCM offers customers services covering the whole industry chain from product design, R&D, production and supply, to marketing, channel, capital and incubation and provides users with total solutions for innovative products

We are here to assist you materialize your ideas from concepts to physical products.

What are the specifics of these production processes?

很多产品就是死在不懂供应链的路上

From mere concept to market analysis, verification of the feasibility of product functions, then to appearance and mechanical design, hardware and software R&D by ID, MD designers, R&D and Product Manager, determination of product appearance framework, internal mechanism, and implementation of product features, followed by production of appearance prototype, functional prototype, and the verification of the feasibility of product design. Generally speaking, it is to make a model out of design drawings to see if the appearance and mechanical design are reasonable, and whether the product functions can be implemented.

很多产品就是死在不懂供应链的路上

很多产品就是死在不懂供应链的路上

Next, resource matching. To match the most suitable manufacturer who understands the product best to design mold and make products out of molds. After a product is produced, a pilot production is required to prevent mass production defects caused by materials, die sinking, and improper process control and ensure success mass production.

 很多产品就是死在不懂供应链的路上

Finally, we have to find a testing and certification company to conduct a sample inspection of product quality and to audit and evaluate the quality system of the enterprise. More generally speaking, it is to find professional quality inspectors to stamp your product to prove that your product quality is acceptable, so that users can use it with assurance.

很多产品就是死在不懂供应链的路上

 

The last but not least, the production and supply. It also poses challenges to sell (sell to whom and how to sell). We integrate the channels to sell the high-quality products to cross-border B2C such as Amazon and LZADA, as well as to the offline channels of supermarkets overseas such as TARGET. We also act as agent for premium brands to operate on overseas platforms such as Amazon.

Maybe you already feel tired of reading such long pages of text. But in fact, the production of a product is far more complicated than these few short paragraphs. It takes a great deal of time and effort of industrial designers, product development managers, project engineers and quality engineers, who, as I have mentioned in the last article, work late into the night to revise designs and regular stay in factory to monitor the project day and night.

很多产品就是死在不懂供应链的路上

The mere production of a product involves the matching of a large number of suppliers in battery, antenna, motor, hardware, electroplating, prototype, mold and so on.

Dear reader, have my long-winded article provided you a glimpse of what product supply chain is? It doesn’t matter if you don’t understand. Just remember that we are Shenzhen LKKER R&D Supply Chain Management Co., Ltd. specialized in supply chain management service. Don’t hesitate to contact us for a product demand. We are the best in delivering good products, after all.