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Are You Turning Away New Business?
Do these potential suppliers not want to grow their business?
Are they simply not interested in new customers and new
applications? That doesn't seem likely. Almost every business I
know wants to grow. They often talk about their growth strategy.
No, I don't think it is a lack of desire to acquire new business
that explains their poor responsiveness.
Do these potential suppliers not want to be involved during the
development phase of a project? Do they not want input into the
design? Do they not want to make sure the resulting new design
is fully compatible with their materials and processes, taking
advantage of their knowledge and experience? Would they rather
wait until the design is finalized and then compete for the
business based solely on price and delivery? Somehow it doesn't
seem likely that their lack of responsiveness is due to a lack
of interest. In fact when I eventually do get a response from a
supplier they seem very interested and very anxious to
participate even though the timeliness of their participation
leaves much to be desired.
I think the problem is two fold. The first reason for a lack of
involvement by potential suppliers is the fear that they will
invest resources in a new project, only to lose the business
based on price, with no consideration given to the fact that
they helped with the development. Unfortunately this is not all
that uncommon. Given the competitiveness of the market and the
constant pressure to drive down costs, many materials and
purchasing departments place little value on supplier
participation during product development. That situation is
unlikely to change anytime soon, if ever. So what is a supplier
to do? I recommend that you charge a nominal fee for your
engineering services and product prototyping. I know a lot of
companies expect to receive free engineering support and free
product samples and prototypes, but I'm not one of them. I think
it is unreasonable to expect a company to donate their valuable
resources hoping to get a piece of the production pie. I
wouldn't do it and I don't expect anyone else to either. And
speaking of competing based on only price after the development
is complete, many (almost every domestic supplier) is scared of
China. Given my current frustration with domestic suppliers, I
thought I'd try to work with China. I did a Google search and
easily found several companies specializing in the particular
components I needed. So I filled out their web inquiry forms,
expecting a prompt response. Guess what. Nothing. I'm still
waiting for a response.
The second reason for a lack of involvement by potential
suppliers, and I think the main reason, is they don't have
anyone left in their organization to respond to new product
development needs. Companies have truly gotten lean and mean.
Unfortunately that also translates into lean and unresponsive.
The business press gets excited and impressed when companies
reduce their workforce. The bottom line is immediately improved,
the "productivity" measurement increases impressively. But those
are short term measurements. Those short measurements do not
reflect the ability of a company to grow their business. If you
have a company that can no longer respond to the needs of
potential future customers with new incremental business, then
you are in trouble.
Take a look around you. Have you gotten so lean that you can't
support the growth of your business? Are you turning away new
business?
About the author:
Bob Utter, Senior Consultant and owner of Innovative Thermal
Solutions, LLC has over thirty years experience developing new
mechanical and heat transfer technology including seventeen
years in progressive engineering management positions with
industry leading companies. He is an inventor with 29 patents on
mechanical and heat transfer technology. www.innovativethermal.
com