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By Brenda Doskocil on  12/29/2015

3 Things to Avoid When Finding a Strategic Sourcing Partner

what to ask when sourcing  die cutting needs

A Sourcing Manager’s job is hard. You’re judged not only on finding sourcing partners for your organization who have the capability to do a job, but also finding the best partner – one who’s capable, flexible, and trustworthy. That task is often easier said than done. Plenty of strategic sourcing partners say they can do the job, and they may very well be able to do exactly that, but it’s up to you to determine how efficiently they can do it and decide if they are the best fit not only for the job, but for your company.

Because there are so many potentially great sourcing partners from whom to choose, here are the top three things we believe you should avoid when choosing a strategic sourcing partner. These tips will help ensure that your list of the best possible candidates remains short.

Are They Single-Minded?

Dentists can now fill cavities using lasers instead of metal drills. The process is apparently more comfortable for the patient and removes more decay and less tooth enamel than the old drilling method, yet 80% of dentists are still sticking with the old method. Why? Because it’s cheaper for them – the laser is extremely expensive yet the cost of filling a tooth remains the same whether they use the laser or the drill. It may also be because they do what they know, or have no interest in learning what benefit the new laser might provide. Ten years from now when the 80% of dentists are using the laser, those who aren’t will be gone. It’s the rule of innovation – innovate or die.

The same thing happens in most, if not all industries. You either innovate, keep up with industry innovations, or you fall behind and eventually die. Die Cutting is no different than dentistry in that regard. As a Sourcing Manager, however, you can’t be expected to know what innovations are taking place in a suppliers industry, so how can you tell if a sourcing partner is an old dentist using a metal drill, or an innovative dentist using a laser? There are a couple ways you can find out:

  1. Talk to them. Ask your precision die cutter what processes they use to cut material and if they’re working on any new or innovative techniques to bring products to market. If they’re an innovative shop, they’ll not only be willing, but also excited to share what they’re doing.
  2. Look for it in the pricing. If you’re receiving multiple quotes for a job from your sourcing partners and the pricing is uneven, don’t simply go with the one in the middle. Ask the lowest bidder why they’re so low compared to the highest bidder. It may not be a lowball price, rather a process technology that’s enabling them to offer a stronger price.

Great Sourcing Managers look for great sourcing partners, and while plenty of good ones exist, the great ones are few and far between. Take the time to ask your potential sourcing partner the tough questions that might not necessarily be applicable to your current project, but will make all the difference in the world toward cultivating a mutually beneficial long-term relationship.

Are they Diversified?

Back in the financial crisis of 2008, we saw first hand in the die cutting industry how lack of diversification crushed businesses that had been around for ages. Die cutters who (primarily or exclusively) served the auto industry suddenly found themselves spread thin on cash because they were too far extended to cover material costs for invoices that weren’t getting paid. There were also no new orders coming in, so jobs were cut and sacrifices were made until they simply couldn’t function.

Understanding your sourcing partner’s market diversity and capabilities outside your own industry will not only save you during the next recession, but will also mitigate risk during general market fluctuations. 

Are They Interested in Your Business or Your Money?

Avoid sourcing partners who are more concerned with invoicing turnover than understanding your business. This seems like common sense, but when a Sourcing Manager is seeking a competent partner to do a job, there’s likely going to be a long list of capable partners who will be able to do a good job on that one order.

But what about the next order, or the other line of business they’ve never asked you about? Good, capable die cutting partners are plentiful. Great ones are rare. Great partners are interested in growing and cultivating relationships with their clients. They want to know about all their client’s lines of business. They look at pricing options for material on future projects that may save cost on the current project. They offer flexible pricing terms and monthly invoicing options rather than project based invoicing only. They don’t simply say, “Give me the PO and let me get the job done.” Great sourcing partners communicate, are responsive, look to see where value can be added across the board, and share your company’s core values. Good partners just get the job done and move along.

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