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How Scalable Is Your Supply Chain?

Part II: How Scalable Is Your Supply Chain?

There are a variety of steps you can take internally to prepare your business to scale, but being truly ready means focusing on more than your internal operations.  Your supply partners play a key role in determining the flexibility and scalability of your manufacturing processes—so you should assess early on if they can meet your growing needs.

Asking the right questions, thinking long term, and doing your due diligence will help you determine whether your supply chain is equipped to scale along with you. To help you get started, here are five ways to assess the scalability of your supply chain, and identify areas for improvement.

Tip 1. Know the manufacturer lifecycle status of your off-the-shelf components

The lifecycle of your electrical components can change without warning, leaving you high and dry when it comes time to scale. Know your distributors, and be on the lookout for changes due to regulations, mergers, or new management. Divisions of component manufacturers can get bought and sold frequently, meaning that your components could be assigned a new part number and issued a new specification. And new regulations (RoHS, REACH, conflict minerals, ISO) force manufacturers to review their product lines and discontinue non-compliant parts.

To make sure that unforeseen events don’t seriously stall the development of your product, make sure that you’re always aware of the lifecycle status of each component.

Tip 2. Keep complete documentation for your custom parts

Because custom parts require more detailed instruction and attention in the production process, it’s a good idea to err on the side of too much, rather than too little, documentation. Thorough documentation and revision management will satisfy all regulatory, design, operations, production, service, and quality needs. For efficiency sake, this should all be stored in a cloud PLM system.

It also doesn’t hurt to familiarize yourself with the steps involved in building your components, since this information could help a new supplier ramp up quickly and successfully.

Tip 3. Watch for signs of supplier instability

It’s never easy to predict when a supplier is becoming unstable, but there are some classic signs that should raise a red flag. For example:

– Have you noticed substantial and/or unexplained changes in part pricing or lead times?

– Are your deliveries usually on time, or do they vary without warning?

– Have you seen any inconsistencies in quality?

– Do you run into problems when you try to communicate with a certain CM?

Once you start paying attention to signs of instability, you will be prepared to correct any problems before a serious disaster hits.

Tip 4. Don’t skimp on key contracts

You likely have contracts with all of your suppliers, but there are certain relationships that you may want to give some added attention. We recommend drawing up a more comprehensive contract with key component providers—one that requires early notification of changes and establishes priority in shortage and backorder situations.

Essentially, your contracts should establish what you are entitled to in your supplier relationships, helping you avoid any last-minute surprises.

Tip 5. Monitor vendor health on a regular basis

Change can sneak up on you, and what you believe to be true may not always be the case. Even if you thoroughly vetted your suppliers at the time of establishing the relationship, when was the last time you audited any of them? What about calling to check in on how they’re doing?

It’s a good idea to understand how their business is going and pay attention to any news that could impact your business. So, start at the beginning, with a conversation. Did you miss Part I of this series? If so, check it out now.