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In the electronics sector, the relationship between suppliers and distributors is more than just a transactional necessity; it’s an important engine for navigating rapid technological change, tight margins and complex supply chains. In fact, the manufacturer-distributor partnership is fundamental to mutual success an d resilience in any market conditions. And when the effort is put into building stronger alliances, everyone wins—including end customers.
Here are five strategies that electronics suppliers and distributors can use to cultivate stronger, more productive relationships and drive shared growth across their supply chains:
- Start talking to each other. Open lines of communication are key to any successful relationship, according to Oxford College of Procurement & Supply, which says the communication itself has to be effective, clear and precise. It should also happen on appropriate communication channels, and always be combined with good listening skills. This ensures that messages are understood and acted on in a direct and appropriate manner.
- Define expectations at the outset. From the beginning, set expectations for the data you need from your suppliers (and, that those suppliers need from their distributors). Once you have that, provide a consistent platform in which your suppliers can carry out those expectations. You should be able to update statuses and communicate back and forth at a part level. “This makes for status updates that are easy to edit and track,” LeanDNA recommends in “3 Ways to Build Better Manufacturing Partnerships.” All communication tools should be accessible to everyone, simple to use and populated with the important data both parties need to see.
- Build a foundation of respect and trust. The business world can be wildly competitive and unpredictable, where getting a solid foundation of respect and trust is vital to effective manufacturer-distributor alliances. “Suppliers want to work with buyers who demonstrate integrity and appreciate them for the value-add they provide to the buying organization,” Oxford points out. “Respect helps to build trust and with that trust comes endless possibilities to increase performance through innovation and problem solving.”
- Be fair. Building trust through respect and openness can be sidelined when one or both parties are not satisfied with the relationship. If the supplier feels like it’s not being treated fairly, for example, it may not perform to the requirements of the agreement. And vice-versa, if the buyer feels jilted, they may resent having the agreement with the supplier and look to source elsewhere. “Fair means being treated reasonably based on the requirements of the contract and relationship,” Oxford adds.
- Put your collective data sets to work. Set standards for measuring the data. Many companies report on and communicate these metrics with supplier scorecards—created by the manufacturer and shared with the supplier on a regular basis to track performance. Each company will have specific needs, but some of the key metrics that LeanDNA recommends include On-Time Delivery Performance (the ratio of on-time deliveries to total deliveries scheduled in a month), Inventory Under Min Performance (percentage of the supplier’s items that are under the Min level) and Quality Performance – the Defective Parts Per Million (DPPM) based on the defect percentage (number of defects / total number of individual item receipts).
To sum it up, strong relationships between electronics suppliers and distributors rely on commitment, clear action and fairness. By prioritizing open communication, mutual trust and respect, fair treatment and data sharing, organizations can benefit from partnerships that are resilient, efficient and ultimately more successful for all stakeholders.
