Our supplier management: Finding a balance among three types of manufacturers
Three types of supply chain ecosystems: From "top - end dependence" to "bottom - end headaches"
Our company's business revolves around wire processing, circuit board assembly, and outsourced plastic and hardware parts. Correspondingly, suppliers are naturally divided into three tiers - top core suppliers, stable and well - matched suppliers, and micro small - order suppliers. The management logics of these three types of manufacturers are vastly different, and each type addresses our "pain points for survival".
Core suppliers for the head: Rule - makers that can only be "accepted and relied upon"
The first category consists of the giants in the industry, such as Molex (connectors), JST (terminals), Chi Mei (plastic raw materials), and Yageo (resistors and capacitors). Their label is Even if you beg them, they may not even bother with you – because their products are core components at the industry - standard level, and our production simply cannot do without them.
The most obvious contradiction lies in the minimum order quantity threshold. For a certain type of connector from Molex, the minimum order quantity is 100,000 pieces, while we only need 20,000 pieces per month. However, there's no other way but to place an order according to the minimum quantity; otherwise, they'll simply reply, "We don't accept small orders." What's even more frustrating is the after - sales shirking of responsibility. Once, there was a problem with the insertion of JST terminals (they couldn't be pulled out after being inserted). We sent three emails asking for improvement measures, and the only response we got was, "This problem is caused by improper assembly at the client end." It wasn't until we presented a third - party inspection report (indicating that the terminal insertion force exceeded the standard by 30%) that they reluctantly agreed to exchange the goods, but they never mentioned "how to avoid such problems in the future."
Our attitude towards this type of manufacturers is very clear: abandon the illusion of "management" and accept the reality of "dependence". Because their product quality is stable enough (for example, the defective rate of Yageo's resistors is less than 0.01%). As long as we can get the goods and exchange them, we'll be very grateful. After all, without their supply, our production lines will come to a direct halt.
Stable matching suppliers: "Tacit partners" that require no management
The second type consists of medium - sized and precisely - positioned suppliers, such as Factory A that produces packaging materials, Factory B that makes wires, and Factory C that manufactures circuit boards. Their characteristic is that "they can just meet our needs", so "there's no need to worry about them" - because they will solve the problems on their own.
For example, Packaging Factory A: Our product packaging often needs to be modified (for example, customers request to add logos or change dimensions). The designers of Factory A will reply with a plan within 2 hours and can produce samples the next day. Moreover, the sample drafts will be revised until we are satisfied. Another example is Circuit Board Factory C: Once, the pads on our circuit boards fell off (the pads detached during soldering). The engineers of Factory C brought a microscope and came to the site on the same day. They analyzed on - site that it was due to "excessively high soldering temperature" and then adjusted the soldering parameters on the spot. The next day, they replenished a batch of qualified circuit boards.
Why are these manufacturers so care - free? Because their scale is just right to match our order volume (for example, Factory A has only 20 workers and can produce 5,000 sets of packaging materials per month, which can just meet our needs). They rely on long - term cooperation for survival, so they are willing to invest energy in solving problems. For them, losing us as a stable customer would cost more than dealing with a batch of defective products.
Mini small - order suppliers: Hitting the "pain points" at every step
The most troublesome are the third category - micro-suppliers that undertake small-batch orders, mainly producing plastic and hardware parts. Their problems can be described as "a mess," and every step is challenging our bottom line.
The contradiction between orders and production capacity: The "awkwardness" of small orders
Our orders for plastic and hardware parts usually range from dozens to hundreds (for example, 300 pieces of the plastic shell of a certain product are needed per month). However, the minimum order quantity of large factories is several thousand, and they are simply unwilling to accept the orders. We can only turn to small factories, but the production capacity of small factories is extremely unstable:
- It takes a whole morning to adjust the injection molding machine (adjusting temperature, pressure, and speed). The first 200 products either have shrinkage (with dents on the surface) or flash (with burrs on the edges), and they have to be discarded before qualified products can be produced.
- For the stamping machine of hardware parts, the sizes of the first 100 stamped parts are either too large or too small. The die clearance needs to be adjusted to make it work properly.
The "vicious cycle" of quality problems: Improvement is always just an "empty slogan"
The common problems with plastic parts are appearance scratches and dimensional out-of-tolerance (for example, the customer requires ±0.05mm, but what small factories produce is ±0.1mm). For hardware parts, the issues are stamping burrs and hole position deviation. We issue MDR (Quality Abnormality Report) to request improvement, and the manufacturer's countermeasures are always "strengthen employee inspection" and "adjust the mold", but they are never actually implemented - the same problems still occur when the next batch of goods arrives.
What's even more of a rip-off is the settlement method:
- For materials settled in cash, the courier comes with the delivery to urge for payment. We can only rush to conduct the acceptance inspection (otherwise the courier won't leave). If problems are found afterwards and we call the manufacturer, they either don't answer the phone or say "We're not responsible for materials settled in cash."
- For materials settled monthly, the manufacturers will only handle issues when "held back by the payment". For example, once the size of the hardware parts was incorrect. We withheld 30% of the payment, and only then did the manufacturer send a technician to repair the mold.
The "battle for molds": Some "tactics" are needed
The molds we made for the small factory are owned by us, but the manufacturer simply won't let us take them away - they're afraid we'll have other factories produce with them. We need to use some "tricks": for example, first tell the manufacturer that "the molds need to be repaired and we'll take them to a large factory for repair". After bringing them back, find another small factory to make molds. Otherwise, the manufacturer will refuse on the grounds that "the molds are in use for production".
The "sandwich" in the middle: The dual pressures from customers and suppliers
Our days are like a sandwich – on one side are the strict requirements of customers (for example, a certain customer requires zero defects in the appearance of plastic parts and a dimensional tolerance of ±0.05mm), and on the other side is the perfunctoriness of suppliers (small factories simply can't meet these requirements); on one side are the difficulties of procurement (it's not easy to find small factories, so sometimes procurement will speak up for the manufacturers: Let it go this time and ask them to make improvements next time), and on the other side are our principles (we can't accept the items that customers have complained about, otherwise we'll be fined by the customers).
For example, once, the appearance of the plastic parts from a small factory was scratched. The purchaser said, "Maybe the customer didn't notice." But we insisted on a return because for a previous batch of plastic parts that we didn't return, the customer found the scratches during assembly and asked us to rework. It cost us 50,000 yuan for the rework, and we almost lost the customer. Only those who have experienced it can understand the feeling of "begging the supplier to do something and then being scolded by the customer".
Breaking the deadlock: From "emotional confrontation" to "pragmatic management and control"
At first, I also tried to "confront them head - on" —— I questioned the manufacturer in the email, "Who is God? Who is your breadwinner?" But it didn't work. The manufacturer simply replied, "Then go to other companies." We had no choice but to go back and plead with them. Later, I realized that "emotions" are useless when dealing with micro - suppliers. We have to use "pragmatic means".
Method I: Increase the full inspection by IQC to block the risks within the factory
Originally, there were only two people in the IQC. Now, three more have been added, and they are specifically responsible for conducting a full inspection of the plastic and hardware parts from micro-suppliers. The goods arrive every morning, and then the IQC starts the inspection:
- Plastic parts: Check the appearance one by one (whether there are scratches or shrinkage), and measure the dimensions with a caliper (whether they exceed the tolerance).
- Hardware parts: Measure the thickness with a micrometer and measure the hole positions with a go - no - go gauge.
Although the labor cost has increased (an additional 8,000 yuan per month), it is much lower than the cost of customer complaints. For example, previously, a batch of hardware parts was not fully inspected. When the customer was assembling them, they found that the dimensions were incorrect, and it cost 50,000 yuan for rework. Now, it only costs 10,000 yuan for full inspection.
Method II: "Set" the standards firmly so that manufacturers have no room to deny
Previously, in our procurement contract, the requirement for plastic and hardware parts was "meeting the customer's standards", which was too vague. Now, it is changed to:
- Appearance: The surface is free of scratches, shrinkage, and flash.
- Dimensions: ±0.05mm;
- Material: ABS material (a material report needs to be provided).
And ask the manufacturer to sign for confirmation. If the next shipment does not meet the standards, return it directly - the manufacturer can't deny it because the contract clearly states so.
Final insights: The essence of supply chain management is "fit"
After experiencing these, I understand that there is no supplier management method that is "universally applicable"; there is only "adaptability"
- Leading suppliers: Accept the dependence because their core products are our Achilles' heel.
- Stable suppliers: Maintain a good understanding, as long-term cooperation is more effective than "management".
- Micro-suppliers: Minimize risks through full inspection and clear standards.
I used to think that "managing suppliers" meant "managing others", but now I understand it means "managing myself" - managing my own expectations (not expecting small factories to achieve the same quality as large ones), managing my own processes (adding full inspections), and managing my own standards (writing down the requirements clearly).
Facing such a supply chain, there is no room for "passion", only "pragmatism" - after all, solving problems is far more useful than "questioning God".