Transcript: Another Ducking Digest?! November 13, 2023

Another Ducking Digest?!
November 13, 2023: 6 Key Supplier Management Practices for Small-Mid Manufacturers

Hello, happy Monday morning! Lindsay and I were just getting caught up. He has the sister visiting from out of town and is looking a little ragged after a busy weekend. I also moved into a new house in Austin this weekend, so I am pretty exhausted myself. Moving boxes and furniture up and downstairs is not my favorite thing to do, and I’m hoping I do not move again for a very long time.

So, last week we chatted about supplier management tactics, talking about ways to better collaborate and work in unison with your suppliers. So, this week, kind of continuing along with that supplier theme, we are going to talk about how to find the best-fit suitable suppliers. These may be alternative suppliers for things that you’re already purchasing, or you may be rolling out a new product line or something new for the business and need to go out and actually find new suppliers.

Lindsay, I know you have a fair amount of experience doing this, working for a few different manufacturing plants, so I would love to have you walk us through and talk about best practices. Thank you, Sarah.”

“Good morning, right. So, great way of teeing up. Even before we manage, even before we use the supplier, even before we qualify the supplier, how do we find them? And it’s a lot more complicated than ‘I’m gonna open up my iPhone and do a quick Google search,’ regretfully. So, yeah, iPhones are wonderful but limited value out here. So, why bother? Well, you know what versus what you know well versus playing favorites, right? Versus, well, you know, Lindsay happens to know this person and she’s cute, so I’m going to buy from her. You know, being overly biased by the young perky salesperson, you know, we’ve got to stick to a broader, more pragmatic process.

And why, you know, why bother? Why do I care? It’s just if it’s wrong, the company will just lose money. But, you know, what’s in it for the supply person? Well, for the supply chain person, apart from the higher cost, there’s disproportionate oversight, you know, a time drain, there’s disappointment of suppliers not following through on what we thought the common understanding was, and potentially selfishly worse, there’s blame that supply chain gets blamed for the quality of suppliers.

So, you know, given all that, a couple of paths we can go down with caution, as you said. One is your iPhone. The internet search is congested with sponsor sites, right? So, and we don’t necessarily want the big suppliers, especially if we’re a small manufacturer working with the local supplier base. You know, valuing flexibility, valuing responsiveness, customer service support can be very important. Yeah, and these are the traits that we discussed last week of managing our suppliers.

The other path with caution is the traditional commodity plan. You know, back in the day when I started in supply chain, I developed commodity plans, and I valued them, you know, pre-internet. So, I valued them like gold, all this research I did on a commodity, but it took a long time. So, rather than wait weeks for supplier engineering resources to come back with something, even assuming we have such a resource in a small company, let alone that they’re willing and able, you know, how might we tackle this problem?

And you know what we’re talking about here is more the build-to-print stuff, you know, the off-the-shelf commodity from multiple available from multiple distributors. That’s a relatively straightforward process, especially if all the candidates are under an ISO 90002 umbrella. You can assume somewhat parity and have a cost-driven decision. But the build-to-print stuff, that’s where it’s going to get tricky. And again, the two conversations, one that today I think we’ll talk about local sourcing, but the other one, remote Asian sourcing, it’s similar but different, right? It’s a different conversation path.

Both of them, we want to use the supply chain superpower, one of the supply chain superpowers of a successful supplier person, because the supply chain’s a horizontal organization touching many things, the ability to get others to talk and to let them talk. You know, Sarah, it’s amazing the things that people will tell you. So, the ability to get who to talk, the ability to get suppliers to talk, of course, the ability to get supplier suppliers to talk, the ability to get service providers to talk, the ability to get competitors to talk. You know, especially maybe digressing back to Asia, you know, people get—it’s so impactful, right, to travel the world, to, you know, guilty as charged, that decades later, I regale Lindsay, the jet setter, yeah, no, the Lindsay, the road warrior, slapping his way across Asia. But I tell these stories again and again years later, you know, to my wife’s dismay.

But so, getting hold of someone, you know, there are people today, there are supply chain people today spending inordinate amounts of time in Asia, corralling them and getting them to tell their story. How was the trip? Where did you go? How many suppliers did you visit? You sourcing one commodity? You’re sourcing a whole bunch? Is this an annual event? Is this a corrective event? You know, you have good suppliers in China. You know, what to look for. So, you know, a wealth of contemporary information right on the local front. So maybe start with trade shows, Sarah, because I think most folks, either they’ve got marketing dollars to burn, right? Sarah, I see you getting excited at that idea, or they’re at a trade show because they need business now. They need business either because they’re a growing company and have got new facilities and spare capacity, or they need new business because they keep on losing customers. So, we’ve got to figure that one out.

And again, I would also throw in there, Lindsay, you said trade shows. Trade shows do not mean it has to be in person. There can also be very valuable, well-executed programs that are run online that you can listen to the recording or tune in as well to learn about new suppliers, innovative suppliers, things that you’re looking for as well. Yeah, great point. And there are the super, there we’re going to get a little devious on the superpower, listen to the recording. It’s going to be crafted, it’s going to be orchestrated. There’re going to be less non-PC statements. But then link in with one of the speakers, ping them and say, ‘Hey, Sarah, enjoyed listening to you on the show. Really interested in your subject. You know, how many days a year do you budget your supply chain team being in Asia to manage? How many suppliers are you trying to manage in Asia and how much does that cost you?’ Just trying to weasel in there and get a compliment and get some G2, like I said, you know, amazing the things people tell you. Try and get beyond the salesperson of the trade show, you know, jumping straight to selling. And, you know, certainly judge them by how much time they’re going to spend listening to you and wanting to understand what your need is and qualifying you because that’s really what we need. If we have a tailored need or specific needs, then we need to have a supplier and a sales organization that wants to tune into that.

Lindsay, where you mentioned trade shows, which we talked about in person and then the virtual component, where when you were out actively looking for new suppliers, where did community fit into the mix? Because I feel like there’s more and more groups that are buy-side only, things like Procurement Foundry or Slack communities. How important was that to you, and did you leverage community at all?

It’s tough to find, but when you find it, there are drops of gold, right? If you meet the senior buyer, or a supply chain person, or an engineer, maybe, or a supplier quality person from a similar industry, or even a competitor, and talking to them at a networking event.

‘How’s it going? How long have you been there?’ You’ve got to show a legitimate interest in who they are, and you’ve got to understand how well-informed they are and what type of company it is. You know, I—there’s a local company in Orange County that is renowned for being slow, and they work in the defense space. So, slow, bureaucratic, don’t embrace change, you know, very middling KPIs. And I met the buyer there, and I asked, ‘How nimble a company are they?’ And he couldn’t catch himself. You know, if I’d asked, ‘Well, I heard they’re slow and bureaucratic,’ he would have been defensive, instead of asking, ‘Well, how nimble are they?’ And he couldn’t stop the laughter in his throat, bubbling out and saying, ‘No, they’re not nimble.’ So, yeah.

And the reason I asked the question is I know that it can be really, really valuable to go to events like a trade show, not only to meet the new suppliers or talk to suppliers exhibiting but also network with your peers, find people who work at similar companies and get past practices, find out what’s working, what’s not working. They may have some supplier recommendations that can really be beneficial for you, right? And I think the rookie mistake is to spend your time getting all the work off your desk before you leave, making the travel plans, choosing the hotel, trying to get the economy premium economy upgrade, getting the clothes organized, and you finally show up. Now, are you going to stay up late having a drink with a friend or are you—you know, how much time are you going to invest in who’s all going to be there? Of the thousand exhibitors or attendees, who are my ten, my twenty, my thirty that I want to connect with? Can I—and God bless direct messaging, right? Just send half of them a text and say, ‘Hey, I’m at the show. How’s your schedule for tomorrow? Can I get fifteen minutes?’ And—but, so, one, arrange to connect, two, now what’s my three questions for this person? What do I want to know? Yeah, and that can really, when you pour all that back into your visit report to your boss, not that he asked for it, but she asked for it, but it demonstrates, ‘Here’s what I did, here’s who I connected with, here’s what I was looking for, and here’s the remarkable things I got.’

Yeah, and Conference apps are really useful. For instance, I’m attending the Procurement Foundry conference this week in Atlanta, and there’s an app you can go on, see everyone’s profile, already reach out, connect, and get things set up ahead of time so you know you’re having meetings set and that there’s going to be value already rather than just showing up and hoping for the best.

Yeah, yeah, a simple little mess—you know, the extreme—you know, I once called in from the backseat of a car and said, ‘Hey, I’m coming down with a supplier selection team. This is not a casual visit. I got the executive decision-makers in the car. We’re scheduled to be there at 10:45. We are looking to make a buy decision in the next 30-60 days.’ And when we got to this major trade show, here we were a secondary customer, but when we showed up, they cleared the booth and closed the booth because they knew that, ‘Okay, these folks are coming, these buyers are coming, they’re serious, they’ve got the decision-makers, they’re going to spend money, we want to.’ So, we got to meet with the management team.

Oh, you know, for 10-15 minutes. So, Lindsay, there’s something else that you have talked about to me before, and you call it the supplier-supplier recommendations. We’d love to have you talk through what that is and how you’ve been able to leverage that.

And the idea, Sarah, is we don’t want to overlook someone in our backyard that we just don’t have exposure to. Suddenly, we’re going to troll the community, we’re going to do the trade shows, we do the networking events, going to check with our own engineers and our own buyers who worked in other companies. For goodness’ sake, ‘Hey, who did you use for impedance control printed circuit board fabs, etc., etc.?’ And put together the list just to make sure we’re not missing anyone. The other way is to take the example. If we’re going after a high-frequency impedance-controlled PCB fab, thankfully, we’re not buying from Asia, we’re still trying to source it locally domestically. It’s to connect with the supplier-supplier, as you said. So, in the case of impedance-controlled printed circuit boards, Panasonic builds a lot of the inner layers that provide the high-tech stuff that allows them to operate at higher frequencies. So, we want to connect with Panasonic and we want to say, ‘Hey, we’re using this new impedance control layer that you’ve started to market. Help us understand why it’s better than this one. And, oh, by the way, how much adoption have you seen in the industry? Is it still early days, or are we into the mature part of the adoption curve? And which PCB fab houses are your local suppliers? And, by the way, who would you recommend?’ So, you know, that’s invaluable information.

And, you know, I think the supply chain superpower is getting people to talk. And, you know, sales folks love nothing, you know, all the NDA and confidentiality aside, you know, sales folks love nothing more than talking and to be recognized as the subject matter experts. So, yeah, a great invaluable source of information.

Right. And then there’s another one that I know you’ve mentioned to me before as well, and it’s, who do the service providers support? So, things like maintenance services, temp agencies. So, maybe if there’s another example or a way that you’ve been able to leverage them as well.

Yeah, especially folks peculiar to your industry, you know, a janitorial service, you know, they’re pretty much industry-agnostic. Equipment calibrators, now you’re starting to narrow it down. Who all are you working with? Do you work with a local customer base? If I’m having you come in to use a piece of engineering prototype equipment in my engineering lab, and that’s a specialty because you’re manufacturer-certified to calibrate this type of equipment, how many—how many other installed bases do you service? How many are within 100 miles of us? Who do you see? You know, who has multiple capabilities? Who do you see being best in class? Who could we chat to to learn best practices? And, oh, by the way, who could we source from?

Auditors. Auditors who are industry-specific. You know, if I’m in the medical device space, oftentimes, my auditor, my US auditor, my ISO auditor will be similarly aligned. So, who else are you—who else are you working with? Who—here’s our—you’re going to audit our supplier base. Anyone. When you think about, here’s my top 10 commodities, you know, who are the rising stars that you see in that area? That’s a—that’s a nice general question. I didn’t ask you who Edwards Lifesciences was using. I just said, you know, when you think about machined metal parts with clear zinc coat, you know, who’s good in that space?

And then, as we close out the conversation today, Lindsay, where do competitors fit into all of this?

Yeah, so that’s—excuse me—that’s—yeah, that’s taking the direct communication to the extreme, right? The superpower is being able to brazenly, in front of a competitor, or—meet with a—sorry, sit in front of a supplier and get them to open up and open up about, you know, how’s your business going? How are—you know, if we’re talking to the rep or the salesperson, how—’How are they growing? How’s that impacting you? Or you’re making your pay plan, you know.’ And if you’re not, you know, ‘I’m sorry to hear that. You know, what’s causing that? Is it Asian competition? Is your competition international? Is it domestic? You know, who’s the big competitors locally? Is it—is it Sarah down the street or someone else?’ And, you know, listen very hard to what they say.

So, that rounds out our conversation today. We will be back next Monday, the week of Thanksgiving. Cannot believe it’s already holiday time, and we will be talking about another topic that is relevant and important to small and midsize manufacturers. Thank you, Sarah