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Small Manufacturer Supply Chain

What about the Supply Chain?

Everybody seems to mention it, but how can small manufacturers fully understand and win work in it?

Small Manufacturer Supply Chain: Need to Know...
What the Big Boys Expect in their Supply Chain?

Where as there is no single thing Prime Manufacturers look for, there are a number of factors that dramatical increase the potential opportunity to enter the supply chain. Consider these points...

  • Can you guarantee a faster, more responsive turnaround?
  • Can you demonstrate how your quality is better, perhaps with a better engineering product?
  • Are you lower cost (total costs)?
  • Have you got a unique selling point Original Equipment Manufacturers (OEMs) will be interested in, that differentiates you from other small supply chain businesses?
  • Can you show how you innovate and refine your manufacturing processes to improve, in an effort to be best-in-class?
  • If required could you scale up production and still guarantee quality?
  • Is your manufacturing process stable, with virtually no variability?
  • Is your product leaner, lighter, more reliable or just a technically better solution than what competitors offer?
  • Do you conform to any industry or other standards?

Points to consider for Strategic Working with OEMs....

  • Show you are open minded and willing to work with others. For example, are your technicians happy to work with OEM production engineers, to refine and customise your components?
  • Often Tier 1 suppliers pro-actively go out and source parts and suppliers on behalf of their OEM customers. It's worth researching what they look for and their selection criteria.
  • Demonstrate lean manufacturing practices throughout your small manufacturing business. When walking the shop floor, your firm needs to visibly look the part.
  • Previous experience of close business partnerships to quickly and dynamically solve problems and improve operations.
  • OEMs want to be assured SMEs are stable and likely to be around for many years to come. Be prepared to answer questions about your finances, customer-base and sales plans.
  • Show how your business strategy is ambitious, with the potential for growth. This may include potential plans for new products or services, and possibly expansion. You may also want to show you have access to finance, as well as industry expertise

Win Supply Chain work with an innovative approach - learn to stand out... 

  • Demonstrate how you add genuine value to what your potential customer is trying to achieve - don't just be yet another 'manufacturing process provider' or 'CAD design outfit'.
  • Do this by researching and building up a picture of what they need, and how you can deliver it better than anybody else for distinct reasons.
  • Align their business strategy, plan or aspirations (typically published or accessible on-line) precisely with what you specialise in. Offer something that is exactly that they need by delivering added value, in a tangible way you can easily explain or demonstrate. Compare and contrast yourself with less capable rivals to illustrate your point.
  • Build your knowledge and network in the industry sector or niche you are targeting. This could be regionally, getting involved in trade groups, interacting on forums on-line or in industry publications, or any other way you can think of. Build your credibility as an authority in your sector. Become the 'go to guy' - the expert business people refer to.
  • Tier 1 suppliers are often 'system integrators' for their prime manufacturers - specialising in buying components and assembling them, before selling these 'modules' to the primes. You have the opportunity to be genuinely innovative and offer tier 1's tangible added value in the form of better quality parts or improved, more reliable manufacturing processes. 
  • Be prepared to court potential customers, investing time building up a trusting business relationship, in the same way you would for a big sales order.

Other Points and Actions to take... 

  • Use industry events, exhibitions and on-line research to investigate and target types of components, assemblies or categories OEMs are willing to outsource to the supply chain.
  • Prime Manufacturers and tier 1 suppliers will be expecting a minimum standard of knowledge and capability inherent within your firm, if you are to be considered in their supply chain. They set and expect high standards.
  • They expect you to hit the ground running and deliver from day 1 – no excuses!
  • Advice Manufacturing enables your engineers and technicians to top up their knowledge, getting up to speed rapidly in critical areas.
  • The information here enables firms to modernise and raise their skill and knowledge levels across the board. Being more rounded in this way is important as many small manufacturing businesses possess specialist expertise in one or a few fields.

Tip: How to position your SME to win supply chain work: Read all the information on this page before putting together a plan, with dates, actions and assigned responsibilities. Then give someone the responsibility and authority to execute it...

Question? -

What makes the best small manufacturing businesses winners in the supply chain?

Advice Manufacturing is geared to helping businesses in the supply chain, in all sectors of manufacturing industry. Prime contractors are typically underpinned by clusters of manufacturing businesses, large and small, who feed off each other supplying components and assemblies, new services, skilled labour and innovative improvements. Small manufacturing companies in the supply chain generate more jobs than exist with prime manufacturers – fact!

However the pressure is on, as prime manufacturers and their tier 1 suppliers are constantly cutting costs, demanding ever higher quality assurances and being more selective about companies in their supply chain. Additionally, the global nature of modern manufacturing means lower cost overseas competition is a constant threat. However, there are opportunities as large manufacturers are outsourcing more. So, what do winning small manufacturing business do to compete and thrive? Here’s what…


They professionalise and transform the way they do business by…

  • Better quality, more reliable products, delivered faster than their rivals.
  • Exceeding expectations with a relentless focus on first class customer service. Delighting clients, by listening carefully and fully understanding what they want – then an uncompromising concentration on delivery.
  • The ability and agility to handle urgent requests, short notice changes in orders and shifting customer priorities.
  • Radically better productivity, by applying lean manufacturing principles
  • Constant innovation and improvement, including new product development
  • Adopting and fully exploiting new technologies, such as 3D CAD, CAM and automation
  • Updating and retaining the skills that matter; personal development for all
  • Strong leadership and management to organise, motivate and drive progress

Sounds too good to be true? Well believe me it is achievable. What’s more the purpose of this website is to make it happen, both for engineers like you and small manufacturing companies like yours.

Without small suppliers, the larger manufacturers wouldn’t be able to deliver the headline grabbing projects that make the press, the few times you see industry in the media. Small manufacturers should rightly be proud of their contribution and justifiably be recognised and praised. After all, they do it with fewer resources, less employees, fewer facilities, less cash-flow and less room for error should something go wrong.

LG Motion
A Manufacturing SME Exhibiting Supply Chain Best Practices   

Small Manufacturer Supply Chain: Need to Know...

Supply Chain Relationships: Small Manufacturers and Big Business

A recent Government report highlighted key themes between big business and small and medium sized companies in the supply chain. Lord Young’s ‘Growing your Business: A report on growing microbusinesses’ emphasises the following points:

  • Big businesses have capital and access to markets and customers. Whilst small businesses are often more agile and innovative and can provide niche products or services. By bringing these elements together, big and small businesses are well placed to work together (and both profit) through commercial relationships and collaboration.

  • As such, a small business’s strength in a supply chain is often its ability to provide a specialist product or service that larger companies cannot provide themselves or cannot provide as cheaply.

  • This positions small firms as problem solvers and as small but significant players in terms of their value to the prime contractor and the client.

  • A key advantage for a small firm in these relationships is access to markets. Supply chains create a way in for small businesses; they can use the opportunity to build capacity and reputation in a sector.

  • Research (D Jamieson, ORC International) also shows improvements in productivity and performance in such firms when they work in supply chains. Small businesses benefit from the mentoring and experience of the larger companies they work with.

  • The insistence on quality standards by larger businesses often improves quality in small firms, enabling them to win contracts with other companies.

  • Supply chain finance allows small companies to secure funds to ease cash flow and invest in other ventures.

  • Small firms will expect to receive the share of work agreed in accordance with the terms of the contract and importantly they will expect to get paid on time.

  • As well as supply chains, many small businesses and their networks are involved in R&D partnerships or engage in joint ventures with larger firms.

  • An interesting development is an increasing appetite among larger companies to drive innovation through collaboration with smaller businesses. ‘Open innovation’ encourages organisations to look outside to develop new products, services and revenues, innovatively and often at lower cost. It provides good opportunities for the more specialised small firms with the result that they can share risk and reward with their corporate partner.

  • The vast majority of small manufacturers exist through trade sales to larger customers. Trading through supply chains in this way provides a route to larger markets for their products and services, perhaps with greater security and predictability of sales, as well as without significant outlay on marketing and advertising.

  • Big businesses benefit too. Many larger firms need to sustain a minimum level of growth to satisfy shareholders, which becomes more difficult the bigger they become. This is partly because operating at scale leads to risk aversion, but also inflexibility and homogeneity that inhibit innovation. And so innovation comes increasingly from outside – from customers, from suppliers and from non-competing partners.

  • Also for bigger firms, working with smaller innovative businesses can create a buzz around their brand, as well as providing creative and entrepreneurial opportunities for staff.

  • When approaching large organisations, small businesses should take time to understand the needs of the big company. As you only get one chance to make a first impression, they should take care to tailor their pitch. What is the unmet need they can solve? This requires an open mind set that looks to create shared value, not just maximising returns for one side or the other.

Common problems in the manufacturing supply chain from Peter Jones

Supply Chain Essentials: An Automotive Industry Example (Use the Pause button!)

We want to ensure the country is the best environment for manufacturing suppliers in the industrialised world. We want to boost innovation, skills and exports levels among our supplier base. We want to see our suppliers retain significant market share in mature, high value sectors like automotive and aerospace, and slow the growth in imported components. And we want to establish collaborative, strong, long-term supply chains in emerging, strategically important sectors like offshore wind, nuclear new build, shale gas and advanced materials.

There is no single solution and a range of options and actions are required to address the needs of the nation's supply chain companies, to enable them to compete and grow and meet the needs of world class manufacturing companies. Hence government and industry will take action together across a number of areas. These include innovation, skills, finance, SME capability, collaboration and supporting supplier resilience. More...

Use Advice Manufacturing to gear-up and win supply chain work, by acquiring the information and meeting the high standards of the big boys.

Next... Supply Chain Fundamentals - Gaining a better understanding 

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