Why people don’t benchmark suppliers

Why people don’t benchmark suppliers? As a contract electronics manufacturer, I often feel like a buyer’s worst enemy is a mediocre supplier.

At least when dealing with a bad supplier it’s obvious there’s a problem making it difficult to ignore or overlook. The real problem comes when dealing with an average supplier: when pricing is average, quality levels only ever cause mild irritation, and delivery and service are somewhat hit and miss, it’s common for a buyer to just accept that this is the way things are.

Coating and encapsulation

In fact, in my experience, I’ve found that a supplier needs to put in a spectacularly bad performance before buyers even start to benchmark the other options available to them.

Which is a huge mistake; benchmarking should be a routine process for any buyer. After all, it’s not just a question of whether you know if your mediocre supplier is up to scratch, but also how can you possibly know that your best supplier is?

Even if they were competitive years ago, how can you be sure that they’re still ahead of the curve in the face of increasingly fluid global pricing, and that they are taking advantage of the latest manufacturing technologies?

It just doesn’t make sense. Why are people so reluctant to shop around, and why does it often take catastrophic disappointment before they take action?

Here are the most common excuses I’ve heard over the years.

1 - Too complicated build so that it is hard to change supplier

First of all, benchmarking is not necessarily an announcement of your intention to change supplier – you may just want to make sure you’re not missing out on savings.

But should you decide to move your build over to a new supplier, any decent CEM will have a team of engineers ready to pour over the minutiae of your designs. By the time they come to actually build anything they should know it inside and out.

Similarly, peer reviews of assembly processes are not uncommon and any suggested alterations will aim to either reduce costs or improve quality.

But most importantly of all, you should ask for a sample for approval. Once you’ve assessed this and ascertained that it is to standard, then (and only then) will anything go to production.

2 - The cost of moving the job to a new supplier

Misconceptions about tooling prices are common, especially where PCBs are concerned.

Any decent manufacturer will not be looking to make a short-term profit from upfront tooling costs, they’re much more interested in securing your long-term business.

PCB tooling should never cost more than a few hundred pounds and, if it is a high-volume job with a good supplier, you may find the supplier absorbing any costs.

3 - Don’t want to upset suppliers by getting others quotes

Any supplier who really believes that their pricing is the sharpest around – and has nothing to hide – will relish feedback on how they stack up against their competitors. If someone’s beating them on price, you can bet a good supplier will want to know so they can do something about it!

There’s no reason to feel like you are offending anyone by benchmarking – manufacturers expect it and it helps to keep everyone on top of their game.

4 - Asking for a quote make me vulnerable to spam

The days when pushy salesmen did well in contract manufacturing are long gone. Pushing might achieve a few short-term sales, but it’s not conducive to a sustainable working relationship and modern suppliers are well aware of that. No supplier worth working with is going to be calling you every 5 minutes and badgering you to place a PO.

Excellent suppliers know that the most effective way to win business is to simply be the best and give customers what they want. If they don’t win this order, they’ll still want you to hold them in warm regard the next time you benchmark suppliers.

5 - Is price correlated with quality?

In all honesty, this is actually a valid concern. The price fits your budget, but how do you know that you’re not going to end up with an unresponsive supplier and thousands of poor-quality product units? I’ll discuss easy solutions to this issue in my next blog post.

6 - I don’t have time to get quotes

With the advent of the internet, all you really need to do is send an email listing your bill of materials and volume requirements. That should give more than enough information for a contract manufacturer to estimate the build cost.

Component prices, lead times, availability, etc, all of these are the manufacturer’s concern, not yours. You just need to sit back and should receive a quote in around one to two days.

Conclusion

• April 30, 2015
• Latest News, Not categorized
• Huyen Tran

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