How to Tell When Your Contract Manufacturer is “The One”
We’ve talked about finding a perfect fit contract manufacturer (CM) partner. However, no matter how compatible two parties may be, what you get out of the relationship depends heavily on what you put in, and that itself depends on what you are looking for.
When you think about it, CM-manufacturer interactions are not all that different from what we see in our everyday lives.
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TransactionalWhile common in the manufacturing industry, this hardly qualifies as a relationship. Translated into the lives of individual consumers, it is comparable to running out of a household item you need right away, such as milk. There is no shortage of (and little price difference in) places that sell milk, so generally you’d go to whichever is most convenient at that time. Then the next time you run out of milk or batteries or toothpaste or whatever, you’d also choose the store, gas station, drugstore, etc. that most easily fulfils your immediate requirement. As we said, hardly a relationship. Transactional outsourcing works in the same way. Individual projects are assigned based on simple and objective criteria such as price. Interactions only last for as long as the project itself. There is no exclusivity. For your next or concurrent project, you are just as likely to work with a lower bidding competitor. |
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RepeatIf you live in the suburbs, you likely have several grocery stores within easy driving distance. How many? Six? Eight? More? And yet, for your weekly grocery shopping you likely go to the same one or two. Here reasons are more nuanced. They have a brand you like; you know the store layout; parking is easier, or it’s simply the one you’ve always gone to. Whatever the reasons, that’s where you shop. In repeat relationships, manufacturers have a short list of preferred CMs and work with them often, generally through a familiar point person. The reasons CMs are placed on the list of a particular manufacturer varies with priorities (some of which we’ll examine below). For any project, those on the list are always the first – and often only – port of call. |
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Long-termAt a consumer level, this is comparable to large projects and greater associated risk. For example, making renovations on your home. In such cases you would likely conduct a fair bit of research before deciding on a contractor and put a great deal of weight on recommendations by friends and family. You call the contractor by name, they do the same. You share personal details such as your phone number, address, and emergency contacts. You may even trust them with your house keys. Unless the trust is broken, they will be your one choice for all future projects. In manufacturing, long-term relationships involve long-term contracts. CMs are carefully vetted and trusted with more information. Interactions move past the mere taking of instructions to discussions in which the CM provides input and ideas about current projects. Generally, the manufacturer will deal exclusively with that CM for the duration of the contract. |
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StrategicThis relationship is akin to a committed partnership. For individuals, it’s similar to starting a new business with someone, or even deciding to get married. In both cases, your partner is someone you trust and expect to be a part of your plans and dreams, whether it’s a decision for what to do over the weekend or goals for years into the future. Likewise, in a strategic relationship, you share your wider vision with your CM and they, in turn, consistent and proactive in sharing ways to advance your business goals. You rely on your CM’s expertise, unique knowledge and discretion. This relationship is marked by collaboration. Communication between team members is frequent and productive, therefore projects go smoothly with fewer issues across their lifecycle. Contracts are long-term and likely to be renewed. |
Relationships don’t just happen, either in life or in business. Both are affected by numerous factors.
Do you work well together? How aligned are your values and working methods? An ideal partner CM need not necessarily mirror your company culture. However, they will be agile and work closely with your team to ensure a smooth and pleasant journey together.
Bonds don’t get forged overnight; it takes time to build them. The longer you work with you CM, the stronger the relationship – especially if you consistently work with the same group of people.
How well do your teams get points across? While communication tends to flow more easily with time, a CM that values partnerships will take measures to facilitate collaboration from day one.
This, of course, depends on whether you require different CMs for different needs. If you have one that can assist you at every step of your product lifecycle, you can both concentrate on nurturing the one relationship you have.
Trust also builds with time. However, a good early indicator comes from word of mouth. What do other manufacturers say about your CM? Are they reliable? Do they deliver quality? Do they protect their customers’ intellectual property?
Trust begets loyalty and confidence is earned. A loyal CM is one who gives you and every one of your projects their full commitment and attention. They would never ask themselves “which customer is more valuable?”. Tip: It speaks volumes if a CM’s current relationships are primarily long-term or strategic.
How much information do you feel safe sharing? How much information do you share with one another? What type of information do you share (i.e. confidential information such as new product plans)? In a strategic relationship, CMs have access to all the knowledge they need to do their best work for you AND pro-actively share all information that is helpful to you.
A partnership requires both courtesy and honesty in all interactions. Welcoming feedback, encouraging frequent updates, being as receptive to bad news as to good, all contribute to a relationship that is strong enough to overcome any obstacle, new or known.
The right relationship with the right CM is both fulfilling and imperative to achieving your goals, whether immediate, tactical, or strategic. Could Providence Enterprise be your perfect partner?
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