It’s not just about the money

Posted by Jim on February 15, 2018  /   Posted in Blog

14 Feb 2018

Engineering capacity news posted by Andy Sandford

The UK’s manufacturing output hit its highest levels in ten years at the start of 2018. The nation’s headlines hailed this as a sign industry has turned a corner and put the economic crisis in the past. Rob McDermott, purchasing manager for steering system manufacturer Pailton Engineering, explains why this is the ideal time to assess your supply chain.

It’s taken a decade, but manufacturing is beginning to recover from the effects of the global economic crisis of 2008. On January 10, 2018 the BBC’s economics editor, Kamal Ahmed, stated that this is the first time since 2008 that “the three main engines of global growth — the USA, China and Europe — are performing strongly at the same time”.

Combined with the UK Government’s flagship Industrial Strategy, the future looks bright for manufacturers. However, businesses risk missing out if they don’t ensure they have the proper foundations. The lifeline of manufacturing is the supply chain, and it’s never been more important to work with suppliers that are in sync with you.

Stop putting price at the top of the list

After working so hard to move on from any economic crisis it can be hard to stop letting price be the deciding factor in choosing suppliers. However, of the four key things you need to consider when selecting a business to work with, price should not be at the top of the list.

First, you must get quality right. Can the supplier deliver a product to the standard you require? Second, do they have the capacity to deliver the quantity of product you require to your deadlines? If they can do this, then you can move to look at costs. After all, poor quality components delivered late will cost you much more in the long run, even if the initial fee was the cheapest on offer.

The fourth point you must take into consideration is service. Many businesses stop after the core three criteria, but if you leave service as an afterthought you could be left high and dry if something goes wrong. So, make sure the supplier you choose can work with you quickly if order specifics change or if an issue arises.

Build meaningful relationships

Naturally, the stronger the relationship you have with your suppliers, the better the service you receive. However, it’s difficult to develop mutual support and cooperation by placing one-off orders.

At Pailton, for example, we meet with our top-tier suppliers quarterly to share our priorities and update them on any changes to our business and to learn the same about them. This is a valuable opportunity to assess whether you are both still in tune or whether you need to amend the way you work together.

This meaningful, lasting relationship gives suppliers the confidence to invest in the tooling or labour necessary to meet your demand and encourages a higher standard of service because they know they can rely on the contract.

Don’t go it alone

Even if your purchasing team is doing all the above, it’s important that other departments are also involved in assessing new suppliers. If the component doesn’t measure up to the design team’s expectations, for example, the rest is redundant.

So, in addition to a site visit from your supply quality team to audit the processes and standards of a new supplier, make sure you provide your designers with samples of the product to test and provide feedback on.

If we’re to truly capitalise on the growth of manufacturing, we need to switch our focus from price alone. To provide our customers with high quality products, we must ensure a quality, reliable supply chain, and you can’t achieve this without building lasting supplier relationships.

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About Jim

James is a director with JCR Network Services Ltd, which provides sales, marketing and business development expertise to local SMEs in Ireland and the UK. Many businesses have developed their growth strategies through our focussed actions. We specialise in helping the agri-food , emerging technology, manufacturing and services sectors.

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