The supply chain disruption of the past few years has spotlighted how fragile the international shipping ecosystem is and the high price of outsourcing as a way to manage costs — but it also underscored a forgotten strength. According to a late 2022 Deloitte survey, the majority of respondents in the manufacturing sector have lost up to 13% of their profits as a result of supply chain disruption, but across the board companies with solid manufacturing partnerships faced much less upset than those committed to lower cost over quality relationships.
Strengthening manufacturing partnerships is key to succeeding in the new supply chain landscape and navigating volatility. Here’s how to build better supplier relationships and maximize ROI.
The Benefits of Strong Manufacturing Partnerships
Strong manufacturing partnerships come with a number of benefits for all parties involved. Companies that prioritize their supplier relationships see:
- More supply chain transparency. Companies with open communication and trust in their suppliers can have real-time information sharing and visibility across the supply chain, facilitating better tracking and monitoring of inventory, production, and logistics.
- Less disruption. Effective manufacturing partnerships can facilitate joint contingency planning and risk management to reduce the impact of unexpected events and minimize supply chain disruptions. Motivated partners can even expedite shipments to avoid delays if needed.
- More on-time delivery. Collaborative manufacturing partnerships enhance coordination and scheduling, ensuring products are produced and delivered according to agreed-upon timelines.
- Higher quality products. Secure manufacturing partnerships are defined by shared values, including standards for product quality, continuous improvement, and rigorous quality assurance (QA) processes.
4 Ways to Maximize the ROI of Manufacturing Partnerships
The benefits of resilient manufacturing partnerships can have a major impact on your productivity, revenue, and profit margins. Here are four ways to strengthen manufacturing partnerships and realize their potential:
1. Prioritize communication
Meeting with manufacturing partners often and at a regular cadence — whether in person, via video conferencing, or a simple phone call — is critical to strengthening relationships. Regular contact builds a foundation to deliver honest feedback, set expectations, address challenges, hold each other accountable, and have deeper conversations about each company’s goals and values. All of this fosters greater mutual understanding and trust.
2. Find win-win trade agreements
The pandemic and resulting supply chain disruption were challenging for the industry, but these trials underlined the principles of cooperation and mutual advancement. Seeking win-win trade agreements means identifying mutually beneficial terms and conditions in contracts and agreements, ensuring that both parties feel the partnership is valuable and worthwhile to continue investing in.
3. Pay premium for consistency
In many ways, the old supply chain model prioritized low cost above all else. The trade off was often greater distance between the buyer and the supplier, which resulted in delays and a lack of material availability when the supply chain fell apart. Now, paying more for consistency and reliability from suppliers ensures more supply chain stability and security, to the benefit of suppliers, manufacturers, and customers throughout the supply chain.
4. Give partners the benefit of the doubt
It’s unclear when supply chain volatility will subside, so even strong manufacturing partnerships might not be completely free of disruption and disappointment. For consistently loyal and reliable partners, be willing to forgive delays or mistakes from time to time, especially when they result from unforeseen circumstances. This kind of grace not only strengthens bonds but also encourages partners to invest more in the relationship, ultimately leading to a more enduring manufacturing partnership. A manufacturing partner may even return the favor if your team finds themselves in trouble in the future.
Master Fluid Solutions was founded on the principle of the Golden Rule: Treat others as you want to be treated. This value translates to every aspect of our operation, from the quality of our TRIM® cutting fluids and industrial solutions to how we work with our suppliers, empower our distributors, and support our customers. Get in touch to learn more.