Recently we had the following scenario:
A distributor, whom we have not heard from since 2018, contacted us asking for a quotation for one of our FT products that we had designed in with the end customer, having provided a solution and free of charge samples and been advised the part was approved by their engineering team. Having attempted during 2018 and 2019 to discuss production orders for the part, which had gone totally ignored, we had finally given up.
The distributor was rather shocked when we advised that we needed an end user statement and that we had an MOQ for the device which was not a standard Force Technologies part. In fact the conversation became rather heated with the distributor demanding we provide a quotation within 48 hours with no MOQ. Needless to say we No Bid.
Apart from really annoying me – it did start me thinking about how certain customers in our industry really do believe that they deserve support and samples for free, can then wait years without giving suppliers feedback and then all of a sudden need and demand product. This is of course probably because the source of the original part has become very scare or they have been stung by buying some counterfeit product along the way.
So this is my guide to Supplier Service:
Communication is Key
Clear, consistent, and honest communication is fundamental. Customers should keep suppliers informed about their needs, changes in demand, and any issues that arise. Regular check-ins can prevent misunderstandings and foster a collaborative relationship. This is not the responsibility of a distributor that one may use from time to time – as the end user and prime its your responsibility.
Respect and Professionalism
Treat suppliers with the same respect and professionalism you would expect from them. This includes agreeing to meetings, responding to communications in a timely manner, respond to communications full stop and showing appreciation for their work. You never know – you are so busy trying to fight fires but the supplier may be standing there with a fire hose !
Fair Negotiations
Negotiating terms that are fair and beneficial for both parties is essential. Avoid pushing for prices that are too low as this can lead to poor quality products or strained relationships. Just because you bought a product that was in production 10 years ago but is now obsolete and you’ve bought some old stock from China and you have a price on your MRP does not mean that is a good price. Instead, aim for a win-win situation where both sides feel valued.
Prioritize Quality Over Cost
In the semiconductor industry, buying cheap products is not always the best solution. Low-cost components can compromise the performance, reliability, and longevity of the final product. Investing in high-quality materials and solutions from reputable suppliers ensures better overall results and minimizes the risk of costly failures down the line.
Reliability and Trust
Build trust by being reliable. Suppliers are constantly being asked to be accredited to Quality schemes which cost time and money by customers who impose rigorous conditions on orders. This should be a two-way relationship. This means sticking to agreed payment terms, don’t force smaller companies into long payment terms by refusing to do business with them if they don’t agree. This causes them cash flow problems and if they go out of business that could cause you a problem. Provide clear and accurate forecasts, and be transparent about any potential issues. Trust is a two-way street and is fundamental for long-term partnerships.
Recognize Efforts and Hard Work
Acknowledge and appreciate the hard work suppliers put into developing solutions. Many suppliers go above and beyond to meet customer needs, often investing significant time and resources. Recognizing these efforts can strengthen the relationship and encourage continued dedication.
Plan for Obsolescence with Strong Supplier Relationships
Effective planning for obsolescence in semiconductors requires strong supplier relationships. Suppliers can provide crucial information about product lifecycles and potential end-of-life scenarios. A good relationship ensures timely updates and alternative solutions, helping to manage the transition smoothly and maintain continuity. Sustainability can be achieved with long term storage and production planning.
Timely Feedback and Recognition
Provide constructive feedback to help suppliers improve, but also recognize and acknowledge their successes and efforts. Avoid waiting extended periods, such as seven years, to give feedback and then demanding an immediate response
Long-term Perspective
Focus on building long-term relationships rather than seeking short-term gains. Long-term partnerships are more stable, can lead to better terms, and foster mutual growth and understanding.
Conclusion
Maintaining a positive and professional relationship with suppliers is not just good business practice, it’s essential for sustained success. Treating suppliers well can lead to better service, higher quality products, and a more resilient supply chain. Planning for obsolescence in the semiconductor industry, in particular, underscores the need for strong supplier relationships. Remember, a strong supplier relationship is a competitive advantage in today’s market.