Fourstar Connections Blog

Building Solid Supplier Relationships in Electronic Manufacturing Services    

Posted by Brian Holman on Mar 16, 2018 4:33:03 PM

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How Report Cards, Training, and Supplier Retention Programs Help!

Email programs, project management platforms, virtual conferencing, 3D CAD displays, automated production, inventory and ERP systems—these are some of the tools we use to get through a work day. But at the end of the day, one constant remains: we are people doing business with people. Cliché as it may be, our people—more to the point—our relationships, are our most important assets. 

Good People Fueling Great Outcomes 

Supplier Relationships_Electronic Manufacturing_AIn the electronic manufacturing services world, having long-term, reliable relationships with our key suppliers is requisite to running all of these gadgets, electronics, and platforms their optimal best. Without good people fueling great outcomes, what we put into all of the technology at our fingertips won’t amount to anything if what we put in is mediocre. We depend on trustworthy, responsible people delivering on time, with quality goods, and responsive service. Keep in mind that being in business means we also know what it is like to be the customer, so we have a vested interest in maintaining all facets of our relationships—which also means we have a responsibility to reciprocate in kind.  

This philosophy is what motivated us at Fourstar to begin our supplier report card program (see below). At its core, we want to preserve our customer and vendor retention rates. The viability of this ecosystem depends on us to maintain congruency and cohesion among all our relationships, whether or not stakeholders on either end ever actually interact. We won’t make our customers happy if we aren’t able to source quality products at the best costs! 

Ensuring that our collective goals and visions align is the vital ingredient to this end. Shared values—or at the very least—being aware of each other’s values creates a solid base of understanding, agreement, and clarity of purpose that perpetuates stability and longevity in our vendor relationships. According to a blog on getcrm.com, 64% of customers cite “shared values” as a primary reason behind their strong relationship (loyalty) with your brand. Transparent communication is the foundation from which all of this is built. These “soft skills” involved with retaining relationships are as important as the common-sense business realities of it. 

Acquisition Versus Retention 

We are always looking to increase our pipeline and take on new customers, but never at the expense of neglecting existing ones. It isn’t sound business, either. Any time we can decrease costs and increase value and profit, it’s a win for everyone. An infographic presented by Invesp spells out some customer acquisition versus retention costs statistics:  

  • It costs 5x as much to attract a new customer than to keep an existing one
  • The probability of selling to an existing customer is 60 – 70%; while the probability of selling to a new prospect is 5 – 20%
  • Existing customers are 50% more likely to try new products and spend 31% more, compared to new customers
  • Increasing customer retention rates by 5% increases profits by 25 – 95% 

Supplier Retention Program 

We’ve applied these sensibilities to our vendor relationships. We actively nurture them as we would a customer—we have found that the logic behind a customer retention approach is sound and applies here, as well. Acquiring new suppliers, training them, asking them to source new product, having to re-establish trust and loyalty, etc., all are factors that keep us motivated to keep our current suppliers happy. It begins, as noted, with open communication and we have a number of channels we use to keep everyone on the same page. 

Supplier Report Card. Suppliers receive this once a year. There are quantifiable numbers on it—as you would expect on a report card—but the real “meat” is in the comments section (other types of report cards are computer generated and do not offer any additional personal input). Feedback from suppliers is that they love the handwritten comments, which provide a benchmark for them. It motivates them to want to perform well. Our honest evaluation sets expectations that garner trust, which increases loyalty—both ways.   

Quarterly Business Reviews (QBRs). Reviewing QBRs with suppliers allows us to have structured conversations with them. We sit with them and go over goals. We include a status check—discuss how everyone is doing, how we can help each other, explore pain points on either side. Because we are transparent with each supplier, they are aware of their competition. This serves to produce fair pricing, which gets passed on to our customers.  

Volume Purchase Agreements (VPAs). The ecosystem mentioned earlier thrives in a self-sustaining way. It’s business 101. VPAs can vary depending on the volume and frequency of business, payment schedules, YTD progress, general efficiency with regards to delivery speed, and free delivery. (Our ability to provide quick-turn solutions for customers is a direct result of our relationships with our trusted suppliers.) These agreements act as tools that are built to set goals, whether they help gauge eligibility for rebates, terms, discounts, free shipping, and/or return policies. We do look at the value of a supplier on a much wider spectrum than just price and delivery. Entering into a VPA with us has helped suppliers build their businesses, so it is as advantageous for them. There are a number of support services a supplier brings to the supply chain that assist us in being able to service our customers better. We’ve created a mapped-out strategy and process to manage this.  

Compliance Programs. Serving our customers well means being able to source materials that meet their regulatory requirements. Among others, REACH and RoHS standards are important to many of our customers, and we need suppliers that can support such needs. We share training and technical information, which helps us address these issues individually and collectively. 

General Training: We make ourselves available to our suppliers on different levels and in many ways. Fourstar holds trainings and “lunch & learns.” Some of our suppliers are distributors, and we and will travel to their OEMs to meet with them; we will also have them come talk with our sales team for educational sessions. It helps to discuss a wide range of topics, from the typical circumstances that occur within a supply chain to other variables, such as lean practices and sustainability concerns and initiatives.     

Quoting Portal: This tool was created to make our suppliers’ lives easier! We designed an automated system to submit quotes quickly, and then asked for their input for improvements to it. Recognizing the challenges we all face in the electronics manufacturing supply chain give-and-take, we respect their time and efforts, and treat others as professional peers (and often, friends).   

Because We Know 

Because we know each other so well—our company cultures, challenges, and strengths—we don’t have to spend time covering the basics with each interaction. It means we work together smoothly. And if trouble areas do arise, because we are so aligned, we readily “read” each other, and we are that much closer to resolving them. This sets us up to deliver uninterrupted value to our customers. 

It boils down to this: we are people selling to people; buying from people. We are the buyer sometimes, so we know how it feels. The next time you hit “send” on that email, click on the "Contact Us" button, or submit that RFQ, we want you to feel good about it. We are confident that with the solid supplier relationships we have cultivated over the years, we’ll deliver on that.    

Fourstar Delivers

Fourstar has been delivering the highest quality cable assemblieswire harnesses, electronic assemblies, and full-turnkey complex box builds to our industry-leading customers for 30 years. As an electronic manufacturing services provider, we assess your needs and objectives and recommend the most effective manufacturing solution with emphasis on optimizing your total cost, quality, and lead time. We are committed to sustainability in our workforce, partnerships, and supply chain and invite others who are interested in partnering with us to reach out.  

We’d love to hear from you to see how we might help you find a better way with your electronic manufacturing needs. Contact us now and let’s explore the possibilities.


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Topics: Custom Cable Assemblies, RoHS compliance, Interconnect Solutions, Supplier Relationships, Electronic Manufacturing Service Provider

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