How to Successfully Switch Suppliers [Video]

By Scott Anderson on 24 November, 2020

supply chainScott Anderson of Liberty Electronics shares best practices and the importance of a multidisciplinary team in the process of switching suppliers. This includes ensuring adequate production capacity, consistent OTD, and dual-sourcing supply to avoid supply chain disruption. To learn more about how Liberty works with customers on supply chain management and switching suppliers, check out our blog and video below.

 

Mark: Welcome to another episode of Wired Success presented by Liberty Electronics. Today I'm here with Scott Anderson. My name is Mark Cessar. 

Scott is the Director of New Business Development here at Liberty and we are here to talk about switching suppliers. So, Scott, why are we talking about switching suppliers today?

Scott: Well, thank you, Mark. It's good to be with you again. 

There have been a number of studies recently that show that actually a majority of O.E.Ms are considering switching to new suppliers. In some cases they're looking to avoid tariffs or supply disruptions, and in other cases they're looking to increase capacity or improve quality. Unfortunately, switching suppliers, though, is a risky business. 

Liberty has worked with a number of customers over the years who've transitioned business to Liberty from an old supplier, and we've learned some lessons and developed some best practices that we'd like to share today.

Mark: Is there any one thing that stands out above others in terms of best practices in switching suppliers? 

Scott: Well, I'd say, like much of manufacturing, it is really important to focus on the process and also in having a multidisciplinary team that's responsible for and accountable for the process. 

Mark: So, let's talk about the process. What are some key elements?

Scott: Well, first, one thing that's critical in contract manufacturing is getting the configuration right. Does the finished physical product match the technical documentation? Unfortunately, some suppliers make changes to the product without updating the documentation. So, for example, they might substitute a component without updating the bill of material, or they might switch out a tool or change a tool setting without updating the documentation. So, we found it’s critical to have a gold standard of the finished product. So whether it's a physical gold standard or whether it's a digital gold standard, something to validate the configuration against and also having a multidisciplinary review of the technical documentation and the process. 

Second, sharing forecast information with the supplier and having a supplier that has a robust ERP system is important to making sure that the components are arriving when they need to be there to support the transition and also to ensure that there is adequate production capacity to meet the demand. Then, third, it's also important to have some type of supply redundancy so whether that's some safety stock to cover a few months of the transition or possibly some parallel production with the old supplier to cover that period it's kind of a belt and suspenders approach that might not be necessary, but there's really little downside. 

Mark: Is there anything else that Liberty has picked up over the years that could help an O.E.M. in this process of switching suppliers?

Scott: Well, Mark, there are a couple things that we've picked up on that are key, and one is the ability to be nimble. Invariably in these transitions something unforeseen pops up and it's important to have lean processes to be able to respond quickly and also to minimize the cost impact. Second, and probably most important, is commitment on the part of the supplier to the success of the transition. In other words, having a supplier that's willing to do whatever it takes to make this happen for the customer.

Mark: Well, thank you for your time today, Scott and thank you for tuning in to another episode of Wired Success presented by Liberty Electronics.

Topics: Supply Chain Challenges, Manufacturing, Risk Mitigation, Procurement, Cost Control

Author: Scott Anderson

Mr. Anderson joined Liberty Electronics as Manager of Engineering in July of 1999. In 2010 he was appointed Director of Business Development. He previously worked as a project engineer at Pratt and Whitney Aircraft and at Joy Mining Machinery. At Joy, Scott went on to manage international projects including quality improvement initiatives, computer system implementations, and new product development programs.
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