Identifying and implementing the gaps and conflicts that may arise will help you maintain a
long-lasting, transparent
and healthy manufacturing partnership.
To adapt to changes during the Covid-19 lockdown, several businesses were forced to change
their vendors.
Apart from this, there are many other factors you must consider if you want to build,
maintain, and even improve your
existing manufacturer-partner relationships, which include:
1.
Preparing for manufacturing with Market Research
Choosing the right partner can be complex, but gratifying when done right. Try to
really know your partner before you finalize anything.
As you choose a partner, keep in mind what your goals are and what might be the most
accommodating for you.
First, understand what you don’t want in a partner.
You don't want to partner with a new business that has no experience in
manufacturing the products you need.
Are they manufacturing products that are similar to yours? If yes, then
they understand your market and what it takes to
succeed. If not, you want to keep looking.
You may also not want someone who would push to a network of
under-qualified subcontractors. Look for their technical
capacity. Do they have good resources and machines? Can they produce
everything in-house?
Your manufacturing partner must be good at logistical efficiency.
You don’t want someone who has impending regulatory fines or infractions.
They should have goodwill in the market and
adequate experience. Find out what type of clients have they served in
the past.
You don’t want to be over-spending or under-spending. Ask to look at your
partner's finances, and request references
from their other partners.
And so, it is essential to do market research and find the best manufacturing
partner for your needs.
Finding a good and reputable manufacturing partner - How to start?
Talk to people. Some of the best leads can come from referrals.
While some manufacturers may claim to do many things, it might be
beneficial to find one that specializes in specific
products instead.
Your partner should already be producing goods or products that are very
similar to your own.
Search for product suppliers by searching for products by their
NAICS
code. Here’s the link for the United States’ NAICS
code, and Canada’s NAICS code.
Understanding customer demand with market research
Once you decide on a manufacturing partner, you must then find out what you need
to work on building together - and why
it matters,
You have to find out if what you can sell is actually in demand in the market or
not.
Choosing a product or setting a business goal with market research
In a manufacturing partnership, market research plays out as a key step in
planning out a business model.
Conducting market research helps you understand your customers.
It also helps identify products that best suit your customer's needs or
are in demand in a particular locality, state,
or nation.
Identify consumer trends of how certain products performed in the
previous years, know what tanked and what worked.
Know everything about your competitors. Know their goals, what makes them
stand out, what kind of partnerships they
make, who their target audience is, and most importantly,
understand what you must do to create better products than
them.
You can also use research reports, customer surveys, and target focus
groups to better understand your existing
customers.
80% of customer service organizations use customer satisfaction
(CSAT) scores as their primary customer experience
metric.
You can consult experienced researchers to carry out comparative studies and help
you gain a competitive advantage over
other manufacturers.
2.
Communicate regularly to understand the business culture of your partner
The best way to advance and flourish in your manufacturing partnership is to have an
open channel of communication with
your partner.
In most businesses, the downfall in sales is correlated to tensions and miscommunication
between channel partners
and
manufacturers.
96% of people think the businesses they deal with could
improve when
it comes to communication and project management.
Understanding a culture is more than understanding the language.
The customs and values play a significant role in each business culture and can
create a lot of friction if not handled
delicately.
For instance, the Chinese business culture is very different
from
the American business culture.
The Chinese build business relationships based on trust, and they may ask personal
questions that may seem invasive to
Americans.
A partner management software can help you strengthen
collaborative selling and keep track of your partners’ needs to
run the operation more efficiently.
3.
Analyze past product and company history to set realistic goals
Before choosing any channel partner, contract manufacturer, manufacturing
partnership, or even a supplier, base your
decision on statistics and numbers.
Investigate the company, all of its past products, the relationship
the company maintains with its customers, suppliers,
and partners.
Here are two key aspects to consider:
Past products and sales, to understand your partner’s
service
offerings, production capacity, existing networks, and
technical capability.
Company history, to evaluate their company values, financial
stability, regulatory compliance, workforce, and expertise.
By taking time to research all of this, you can make an educated choice of a company
and set realistic goals and avoid
unwanted surprises.
It’s always better to discuss what you expect out of your partnership before signing
your manufacturing partnership
agreement.
4.
Strategic planning to set goals, budgets and allocate resources
You can start by setting priorities for different aspects of the business.
Do your products require any specialized or advanced manufacturing
capabilities?
Do you want to maintain your current supply chain, expand to a global
supply chain, or source new materials?
Are all product materials easy or difficult to source?
How much do you need to produce (volume) and how much do you expect that
to scale throughout your partnership?
What regulatory considerations need to be met?
How will your manufacturing partner protect your intellectual
property?
What is your budget for this partnership?
These questions can ensure you make the right decision when looking for a strong and
long-lasting manufacturing
partnership. The best ones will always have thoughtful answers that relate to your
needs, rather than just offering a
shallow "yes”, “no”, or “let get back to you".
Most manufacturers have moved on to digital transformation during and after the
Covid-19 pandemic. And it is something
you need to discuss with your partner right at the beginning as you may require to
make certain changes that would be an
added cost like,
Are you planning to sell directly to your customers online?
What channels would you target?
Do you want to run Google Ads, Facebook ads, etc.? What would be the
budget for the same?
Are you going to adopt virtual selling?
Would you have an online eCommerce website or an eCommerce platform?
Do you want to automate certain processes?
Would you also sell on an online B2B marketplace?
Do you want to attend virtual trade shows?
Come up with a business plan, set a budget, and allocate resources for the same.
It’s understood that you can’t plan it out, all at once. The key to successful
partner management is to revise your
tactical work plan periodically and make the necessary changes in your manufacturing
partnership.
5.
Do quality and regulatory compliance checks to avoid unfortunate surprises
In a hyper-competitive market, a product will only succeed if it surpasses all
regulatory compliance and uses the most
high-grade quality of raw materials for fabrication. In a virtual and global market,
the competition is cut-throat and
consumers have the entire world to choose a product from.
The smartest way to stay ahead of the curve is by manufacturing and marketing a
durable product, produced from the best
quality of raw materials, and regulatory compliance. This helps you as well as your
channel partner to promote the
product much better.
6.
Analyze inventories to balance demand and supply
The process of examining inventory to decide and determine the optimum amount of
goods to produce to keep your company
profitable, keeping up with customer demand, while simultaneously controlling
costs and increasing sales is known as
inventory analysis.
With effective methods of inventory analysis, you can determine the right amount of
cash that needs to be spent and
locked up in production, reduce capital costs, decrease storage-related expenses,
minimize backorders and stock-outs,
control delays in projects, which can effectively help increase profits.
82% of business failures are due to cash flow issues.
Inventory management software is an instantaneous and efficient way to manage our
inventory without dissipating a lot of
manpower.
7.
Offer competitive pricing to give better deals
Competitive pricing is a policy based on setting prices by
using the competitor’s price as a benchmark. It analyzes and
examines a customer’s response to a price without estimating costs or potential
profits to the business.
To catch a buyer’s eyes, a manufacturer needs to study and poll competitors’ prices,
maintain their prices in the same
bracket, and strive to give better deals than the competition to grow your
manufacturing partnership.
81% of buyers weigh offers from multiple producers
to get a more
desirable bargain.
Discuss with your manufacturing partners how pricing was decided for products at
their end. You may want to discuss
sample pricing, production pricing, and the minimum order quantities (MOQs) pricing
as well. Also, discuss what are the
payment terms and turnaround time for the products.
Research about market trends and economic forces that impact pricing to build a
long-lasting and unquestioning
manufacturer partnership.
AI-powered Automated
pricing systems use software and unique
algorithms to gather competitors' price data on different
shopping portals all over the internet, compare to your product price, and provide
recommendations on whether to
increase or decrease our prices, to put it simply.
8.
Implement Sales and Operations Planning (S&OP)
Sales and operations planning is usually led by senior
management. It is a monthly iterative process that compares
the results and trends from the previous month to make projections and plans for the
next.
Statistical forecasting techniques like this help B2B manufacturers gain a holistic view
of planning and also extend this
information to the sales, marketing, finance, and operation teams for their collective
input and adjustments.
9.
Flexibility and risk management
The process of designing and manufacturing any product is not impeccable. It is a
process of trial and error. Decisions are
made on the fly to change the design or modify it based on an engineering standpoint.
Machines can malfunction, laborers can fall and raw materials can get stuck in transit.
In fact, for every one thing that
can go right, there is a risk of multiple things going wrong in your manufacturing
partnership.
A top manufacturing partner will take the time to work on these problems if and when
they arise. No business can be operated
without taking risks and being flexible to change a step or two to manage them.
10.
Reduce production time to speed up deliveries
The time between manufacturing a product and selling it to the customer is the most
crucial for both the manufacturer as
well as the channel partner. The faster a product is manufactured, the faster it can
reach the market and generate
income.
In a competitive market where the demand and supply curve is not very steep, customers
have the option to buy a competitor's
product in case manufacturing is slower than the customer demand.
Global manufacturing production increased by 9.4% in
2021, after a
pandemic-related drop of 4.2% in 2020.
A manufacturing partnership must work on ways to expedite the production process
constantly, so there is better positioning
for distribution channels, increased productivity, better customer satisfaction, and
increased profitability due
to less raw materials inventory.
11.
Adopt digital transformation
A survey conducted by McKinsey stated:
The shift to digital sales during Covid-19
Video and live chat were the predominant channels for interacting and closing
sales with B2B customers, while in-person
meetings and related sales activities have dropped.
US B2B decision-maker response to Covid-19
99% of B2B buyers claim they will make a purchase in an end-to-end
digital self-serve model, with the vast majority very
comfortable spending $50K or more online.
What this means for your manufacturing partnership efforts is that to stay
competitive in the market, you’ve got to
scale up your eCommerce site. Your customers are already there looking for items and
buying, and so you must be there
too.
Digital transformation in the manufacturing market
It is no secret that going forward, taking your B2B business digital is the only way
to survive in the global market.
Manufacturing partnerships must understand and both partners must accept the
true cost of ownership of software
platforms before they make decisions.
12.
Maintaining relationships remotely
77% of remote workers say they’re more productive
when they’re working from home.
Remote working helps the company save on office space and the employees save on
daily commute and child care. The secret
to doing it right is giving every meeting, call or conference a personalized touch.
In the post-pandemic world, businesses have realized that working remotely is more
efficient than going to an office
every day.
Video conferences/meetings, project management software, virtual trade
shows, and virtual happy hours with
the team are a few examples of how manufacturers, partners as well as customers will
be doing business in the future.