THE CONDUIT

Changing Suppliers: How to Ensure a Smooth Transition

Posted by Scott Hanstedt on June 7, 2017

External disruptors in manufacturing are often out of a company’s control—the economy, skilled labor shortages, technology changes, etc. But there are internal disruptors that many manufacturers put up with on a daily basis that can be equally troublesome, yet production managers hesitate to take corrective measures because of the perceived effort or time it will take to make a change.

Perhaps you’ve felt the pain of dealing with an unreliable electrical or mechanical assembly supplier (e.g., missed deadlines, incorrect orders, and substandard quality). The risks associated with these types of problems can result in lost productivity, dissatisfied customers and missed opportunities to get to market quickly. 

Switching suppliers can seem difficult at first glance, but a strategic approach to managing the transition can bring positive results in the form of greater time and production efficiencies, higher quality and improved ROI. If you’ve made the leap and determined that a new supplier is in order, here are things to consider during the transition.

Understand Current Obligations and Contracts

Before terminating a relationship with a current supplier, revisit the agreement to make sure there are no legal ramifications or previously-agreed obligations. These might include stocking agreements, dedicated inventory or contractual long-term agreements. When starting a relationship with a new supplier, consider whether similar stipulations should be included or amended to better fit your needs. You’ll also want to consider how supportive your previous supplier will be during a transition. Will they continue to support your production demands through the transition and work with your new supplier to transfer inventory, fixtures or other product-specific tooling? Your new supplier will likely have dealt with similar situations and can work with you to accommodate any gaps left from a previous provider. 

Clearly Define Roles and Expectations

A qualified supplier will bring a team of experts to the table to ensure your needs are met, and can make recommendations during each phase of production. Having a dedicated team on your end is important, too. Identify who the key stakeholders are on each side, how accountability is achieved and what measures need to be put in place to set benchmarks, determine pricing and ensure clear communication along the way. This is also an opportunity to reflect on your previously unmet needs and talk with your new supply partner about how they can help. Together with your supplier, agree on expectations of what the implementation phase will look like each step of the way, including specific dates. 

Consider Timing and Scale

Take a close look at your production needs and forecast to determine the best time for a transition to a new supplier. Termination dates with a previous vendor may partially dictate timing, but other factors play a role, too. Consider your team’s workloads and any major milestones or events taking place in your company that will likely require staff time and resources. Examine current inventory to calculate projected depletion, and work with production staff to ensure there’s no gap from one supplier’s order to the next.

Also consider whether a phased implementation to a new supplier may be beneficial. This can be done by dual sourcing the product for a short period of time. While the timeline may be stretched out, it may create more flexibility with resources, production lines and staff time. It could also help ensure your new partner is ready to support full production. 

What to Do When Complications Arise

A new vendor relationship can come with growing pains. If at any time you feel there are uncertainties or questions about the working relationship, or if there are unexpected bumps in the road, take decisive action to keep pressing on toward your goal. 

  • Transparency and open communication are key. Work with your new supply partner to reevaluate timelines and project plans to make sure everyone is on the same page.
  • Identify where miscommunications or missed steps in each phase occurred and discuss ways to accommodate a fix.
  • Identify key players and respectfully hold those responsible for any issues accountable. If necessary, re-engage key management that may have been heavily involved earlier in the process but disengaged once the contract was signed.

Even the best-laid plans go off track at times. Working together, your project can get back on track and the relationship will be strengthened as a result. 

While challenging at times, changing your supplier can add value to your organization beyond cost reductions by taking advantage of better talent, technology, processes and innovation. When you choose MCL as your electrical and mechanical assembly partner, we will implement our innovative processes and do whatever it takes to create as seamless a transition as possible. Reach out to MCL to learn more and see what a true partnership can look like!

Topics: Supply Chain