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April 26, 2017

5 Tips to Determine Who's In Your Supplier Network

In your search for a contract manufacturer, you’d be wise to consider the issues of corporate values and ethical business practices. A 2014 Nielsen survey found that 55 percent of global online consumers across 60 countries are willing to pay more for products and services provided by companies that are committed to positive and environmental impact.

Here’s a great scene from Portlandia about the depths consumers are willing to go to purchase sustainably produced chicken:

 

Okay, maybe the couple in the video went a little far, but asking questions about who supplies raw material or sub-parts to your contract manufacturer is good business for you and your socially conscious consumers. It also minimizes surprises or disruptions to your supplier network. And in business, the fewer surprises the better. In your dealings with your contract manufacturer and throughout your supply network, transparency should become your mantra.

Most contract manufacturers use extensive checklists to vet their suppliers. Questions range from how the supplier will address quality issues to transportation capability to safety and training of employees. Here are a few tips to help ensure a clean supplier network:

Fiscal Fitness

Look at the books, carefully. Check credit reports, cash flow and balance sheets to determine whether your supplier can live up to its financial obligations and have the means to scale up alongside you as needed.

Compliance

Is your supplier compliant with all restrictions regarding sourcing materials, i.e., conflict minerals and the like? Have you seen the documentation? Are they transparent about their labor practices? You do not want to find out after the fact that your supplier uses child labor or other exploitative labor practices.

Communication

How responsive the supplier? Is it easy to get them on the phone or do they respond quickly to email? There is no substitute for a good relationship and good relationships take time and communication. You’d likely do an on-site visit if you used a domestic contract manufacturer. It can be even more important to meet your overseas contract manufacturer, given the distance and potential cultural or language barriers. While you’re there, meet their suppliers and build relationships as deeply as possible.  

Real Capacity

This ties in with the communication and transparency piece. Can your suppliers deliver what you need, when you need it? Are they poised to grow as you grow? This is where and on-site visit becomes so important. You can see what they’ve got in equipment, space, workforce and can learn more about their ability to ramp up.

Corporate Structure/Relationships

We often tell our children to be careful who they hang around. The same is true for supplier/contract manufacturer relationships. There’s a powerful saying: It’s not what you preach, it’s what you tolerate. If your contract manufacturer would accept shady business practices from a supplier, what does that say about what they are willing to do in their business dealings.

The process of finding the right contract manufacturer — using the right suppliers — will take time. But doing the research, asking the questions, making the phone calls and site visits are worth it in the long run in order to have a successful, long-lasting manufacturing relationship.

And that's worth the effort. 

Read more: 

Official-Playbook-for-Selecting-Contract-Manufacturing-Partner

Filed Under: Quality Control, Contract Manufacturing, Sourcing Materials, Suppliers, Supplier Network