EXECUTIVE OVERVIEW
Medical, consumer product, highly regulated and other industries are vetting contract manufacturers who provide solutions to effectively plan and execute complex manufacturing programs, quickly identify and solve critical quality issues, significantly improve operations costs, deliver products that meet stringent quality and federally-regulated controls, manage a vertically integrated supply chain, and produce high quality, market-driven products to its customers.


INTRODUCTION
The turn of the century marks a significant time in manufacturing history. In large numbers companies moved manufacturing offshore. Labor costs were cheaper, the cost of shipping decreased, moving product became less of an obstacle, and international communication became less of a barrier. What companies did not forecast were the challenges to offshoring. Nor, how American manufacturers would leverage the shift to create opportunities for improved equipment, labor and processes.

During the past 10 years, American manufactures have strategically and creatively developed competitive solutions. A number of improvements have been applied that do not sacrifice quality while allowing the manufacturer to mange costs. Domestic and offshore industries are placing great value is sourcing manufacturers who provide this competitive edge. MME group has successfully planned and executed more than 200 complex part, product and project transfers.


What Defines the Process of Transferring a Part, Product or Project?
When tooling, molding, assembly or complete contract manufacturing services from your current supplier or manufacturer need to be transferred to a new supplier. This includes individual or multiple parts, products or the entire manufacturing Project.


When Should a Business Transfer Its Project?

  • Quality Concerns
    • Tool or mold is not maintained to its maximum life/potential
    • Current supplier’s process has changed (with or without your knowledge)
    • Quality of materials has changed / where materials are sourced from has changed
    • Supplier’s quality standards have dropped (with or without your knowledge)
    • Your company has expanded its quality criteria and the supplier is unable or unwilling to adhere to it
  • Costs
    • Current supplier’s costs have risen
    • Current supplier cannot price match
    • Your business is looking for part or program cost reduction
  • Supplier Consolidation
    • Multiple suppliers increase your risk for error and missed deadlines
    • Multiple suppliers require more oversight and management
    • Supplier consolidation may reduce costs
  • Current Supplier Exiting
    • Current supplier is going out of business
    • Current supplier has a conflict of interest – manufacturing products for your competitor or manufacturing its own similar products.
  • Delivery or Supply Chain Challenges
    • Frequent or unacceptable delays in production and on-time delivery
    • Mismanagement of supply chain
    • Deferred accountability
  • Logistics
    • Offshore costs and timing
    • Poor inventory management of raw materials or finished goods (No KanBan in place)
    • Poor forecasting of trends, product cycle sales, inventory levels
    • Lead time for parts, shipping (creates unnecessary down time)
  • Lack of Communication
    • Poor, evasive or unresponsive
    • Deceptive or dishonest
    • Poor communication with all your key suppliers

 

What Questions Should a Business Ask When Vetting a New Supplier? 

  • Do you have case studies or evidence of your experience with past transfers?
  • Do you have a proven process?
  • Do you complete a risk assessment to identify potential or anticipated problems?
  • Can you help identify costs, risks and solutions? And, will you be transparent about each?
  • What quality and regulatory certifications have you earned?
  • What engineering and product development expertise can you provide related to my transfer needs?
  • Do you minimize costs by re-tooling and re-qualifying?
  • Will you negotiate on my behalf to avoid buying excess inventory at inflated amounts?
  • How do I avoid unforeseen costs that my current supplier may charge as a result of me moving?
  • How do I take ownership of the equipment and product stored at my current supplier’s facilities?
  • Will you act as a liaison between my company and current supplier?


What Information Will a New Supplier Need to Thoroughly Plan for the Transfer?
A new supplier should not only ask about technical requirements, but should understand your pain points and expectations. When you choose a supplier, you choose a partner. Considerations include:

  • Full understanding of product, assembly, quality requirements, materials requirements, inventory levels demand, timing, cost concerns/budget, current supplier issues
  • Product specification prints
  • Asset allocation – what specialty equipment do you own or not own?
  • What contractual or other agreements do you have in place with your current suppliers?
  • Schedule


Upon Deciding to Transfer Business, How Should a Business End Its Relationship With Its Previous Supplier?
If it’s the end of the relationship be straightforward and honest about why the business is being transferred. Expect a difficult conversation, but remain firm and fair. Include people from your team who fully understand the process and rely on your new supplier to answer technical questions beyond your understanding. Ultimately, ensure you have steps in place to protect your business.

  • Expect negotiations and resistance, but avoid deviating from your plans
  • Obtain or prepare a list of your equipment and assets
  • Ensure you have ample materials or inventory levels to avoid down time during the transition
  • Determine what the current supplier has for Work In Progress (WIP)
  • Leverage any other business you have and plan to keep at the current supplier, if applicable
  • Consider buying specialty equipment directly from the current supplier (could be a win-win)