Manufacturing Quality Issue Turns into a Huge Success Story for Procurement
If you sell a premium product, manufacturing quality issues can kill your image and your bottom line.
Today I will share a fantastic success story from a strategic sourcing consultant who is friend of mine.
His company was called in by a producer of high-end beverages.
The bottles they use serve multiple purposes. They protect the beverage and their unique shape and labeling are an important part of their high quality brand image.
The issue began when the producer received bottles with defects that prevented them from shipping the product.
The manufacturer made several attempts to rectify the issues but were unsuccessful.
The goal for my friend was to find a new supplier that could meet their quality standards – fast.
Here is a brief overview of what they did:
- They scoured the US, Europe and Asia for suitable bottle manufacturers.
- Ultimately, they invited 18 companies to participate in the RFP.
- After the initial round of bidding they cut the field to 8 and asked for a best and final bid.
- Once they received the final bids, they scored the event and then commenced a negotiation with one bidder.
The results far exceeded the original goal of finding a quality manufacturer and it was accomplished in 3 months.
The new manufacturer:
- Was able to produce the bottles to their quality standards in all respects
- Agreed to build a small warehouse next to the producer’s facility to streamline the supply chain
- Shortened lead time from 6 months to less than a week
- Agreed to Net 45 payment terms based on inventory pull – the company had previously paid 50% six months in advance for each order
- Provided all of this at a 29% reduction in cost!
Amazing! A disaster turned into a huge success.
There was one more benefit.
My friend asked the manufacturer if they would include the bottle molds in their unit price. They agreed in return for a 3-year contract.
Smart!
The last point demonstrates the benefit of hiring people that understand procurement and what can be negotiated.
Let me offer some thoughts that you could consider to create your own success story.
Most people in procurement dislike change.
I get it. It can be a giant pain to change a supplier.
Based on my experience, the longer a supplier has been in place the more likely it is that they have become complacent.
Consider asking for their ideas on improving efficiency and effectiveness.
You are very likely to be surprised at their response.
The larger your account is the harder they will work to keep you. Profitable accounts are hard to come by and they won’t want to lose you.
You may be annoyed that you must ask but the worst that can happen is that you stay in the same place.
In my experience, it is much more likely that they come back with some ideas that will benefit your bottom line.
Why wait?
If you believe that you could benefit from a conversation with my friend, drop me an email or call me and I will set it up.
Ask better questions, make changes, and 2019 will be your best year ever.
Action Step: If you are uncertain where to start the process of change, a procurement professional like myself can provide guidance and expertise to help your organization achieve the results you want.
If you want to go explore this topic in greater detail, please contact me. I invite you to request 30-minute discovery conversation. In my experience the next step will be apparent at the end of the call. I never assume that what I have to offer will be right for everyone, so don’t expect a sales pitch. You can reach me at 973-936-9672.
If you would like to know more ways to reduce costs without changing the way you do business, simply give me a call or send me an email with your contact information and the best time to reach you.
You Won’t Drift to Success©
Commit to taking the next step.
Until Next Time, I Wish You Great Success in Your Business and in Your Life
Mike Jeffries