Finding the Right Sized Contract Manufacturer

finding-the-right-sized-contract-manufacturer-157951373Not every supplier can be everything to everybody.

It's a simple enough concept, but careful consideration to a few key points can make the difference between a successful long-term strategic alliance and one that has little chance for success.

As with most proposed relationships, there are going to be instances when your needs as a customer are not going to mesh perfectly with your chosen supplier. 

However, even when assuming that the supplier possesses all of the key technical manufacturing skills and appropriate equipment to process and build your assemblies, there still has to be an appropriate level of synergies for the alliance to be successful.

As guidance, here are a few points to consider when attempting to determine whether you may be a good fit, or “right sized” to garner the type of attention you desire and will come to expect from your contract manufacturer. 

A good place to start is by determining whether you will be a “relevant customer,”  and whether your proposed spend is going to be an important piece of their revenue. Every supplier’s threshold will be different, but being at least 10 percent of their revenues would be a good place to startIn short, part of finding the right sized contract manufacturer for your company is making sure you're the right sized client for them.

Obviously, it is not realistic for your target supplier to expect you, as a prospective customer, to move all of their business to them all at once. Rather, it is usually anticipated that you will “walk before you run,” and that you will transition your business to them strategically over time. So it is okay to be less than 10 percent initially, as long as you ramp up your total spend within a year or so. Meeting this minimum threshold should make you an important and relevant customer, and they will likely be much more attentive and responsive to your needs.

Being truthful about your proposed spend is key to building a successful alliance. Suggesting that you will be moving more business to a supplier than you really intend will be detrimental, will damage your credibility, and will ultimately do you and your supplier a disservice. Inflating your forecasts or planned spend in an attempt to artificially improve your status with your supplier can further erode your relationship if your actual spend does not measure up to that previously agreed upon.

In the end, the most successful strategic alliances are those in which each partner benefits mutually, and that when each party’s strengths are combined they yield more than they would independently. Mathematically this can be stated as “1+1=3.”If it does not, the alliance will have less chance for long term success.

For more helpful advice on working successfully with an electronic contract manufacturer, download our free e-book

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Topics: Electronic Contract Manufacturing