strategic-oem-supplier-relationship

The 3 Critical Components Of A Strategic OEM Supplier Relationship

March 4, 2016

If your company isn’t meeting important budget and growth goals, you may be overlooking issues that are difficult to see from an insider’s perspective. It’s common to miss these problem areas because you’re intensely focused on dealing with consequences as they arise.

A strategic supplier partner often sees areas for improvement that aren’t visible to you because it examines issues through a different lens. Not only that, but a metal manufacturer should suggest viable solutions.

You need a welding contractor that has the foresight to identify problems you may not expect and work with you to address them before they get out of hand. The following three components of a strategic OEM supplier relationship are essential for your company’s success:

1. Recommendations For Streamlining Parts Production

Today’s market demands speed and flexibility. You need to quickly deliver your finished products to customers and adjust to changing conditions. Plus, your products must be made exactly to your customers’ specifications. A metal manufacturer can identify streamlining opportunities and help you increase throughput while still maintaining high product quality.

Your OEM supplier should conduct audits to develop suggestions for streamlining and optimization. The same suggestions also make it easier for you to reduce production batch sizes. As a result, you’re able to produce according to market demand and minimize your inventory.

2. Audits That Identify Cost-Saving Opportunities

Not only do audits help your contract manufacturer make recommendations for streamlining, but they also identify cost-saving opportunities with regard to your product itself. Your supplier may notice specifications for your metal parts that require additional value-added processing – sometimes, these specifications aren’t necessary for your product’s function. Correcting such issues saves time and money.

Strategic OEM suppliers are deeply integrated, meaning they’re more knowledgeable than typical suppliers. To fully take advantage of a supplier’s strategic knowledge, you should provide as much information as possible about your product and internal production. The right metal manufacturer is willing to invest time in learning about your company.

3. Suggestions To Improve Efficiency Beyond Manufacturing Processes

A contract supplier should continuously look for areas where it can reduce costs, even beyond metal manufacturing processes. Areas like loading and packing trucks are often overlooked unless you partner with a strategic supplier. You can also achieve significant savings in back office processes and by lowering other indirect costs.

Improving efficiency in these areas promotes stability in your organization and gives management time to “work on the business, not in the business.” Managers are often frustrated by the day-to-day tasks that prevent them from developing a strategic direction for your company.

The right metal manufacturing partner minimizes the burden on managers, allowing them to work in a strategic capacity. Additionally, managers have confidence that operations will continue as expected.

By streamlining production processes and taking a strategic approach to your supplier relationship, you can decrease lead time from the point of customer order to product delivery. At the same time, you’re able to increase operating margins with greater overall cost savings.

Ready to learn how to reduce your metal manufacturing costs? Discover six ways a strategic partner dramatically improves your budget.