Manufacturers are faced with many different technologies to be considered in the design, manufacture, and deployment of new vehicles. In many circumstances, it isn’t practical for one manufacturer’s engineering group to really understand how to best leverage these technologies to create differentiation that positively separates your brand from the competition. Separation from your competition is important, and that makes the selection of the right supply chain partner an important task.
So how do you evaluate suppliers to find out if they have the right “stuff” to deliver on the differentiation you need? In this post we will outline what you should consider when selecting the right partner.
Find a supplier you’re excited about and ask about the last time they helped transform a customer’s business through their technology. Even if the technology is not what you are interested in right now, it’s critical to know if they have experience fielding new technological developments, even if in an adjacent industry. Being first to the world with an technology approach to a problem is hard, and you want to work with people who have been down that road before and understand how difficult it is likely to be. Then, you can be more confident they have the will to overcome the unknown obstacles that will come along the way.
Where we’ve seen some of these partnerships break apart in the past is when organizations who have never really moved an industry attempt something audacious, not understanding how difficult it is really going to be. You have to make sure you’ve got a supplier that is going to step up when the going gets tough, because it will.
Make sure that your supplier can explain new and exciting technologies both in a layperson sense and in a highly technical manner. As Einstein once said, if you can’t explain something simply, you don’t understand it. Don’t let acronyms, jargon, and engineering talk convince you of a supplier’s competency. Make sure they can explain the technology in a way the board, your engineers, and your end customer would understand and are convinced by.
Philosophy & Culture
Innovation is hard. To create technology-based differentiation, with the intent of winning market share, innovating with your supplier is going to hurt a little bit. Doing innovation of real marketplace consequence is challenging — it will take longer, cost more, and challenge your business and your supply chain partnership in ways that cannot be anticipated at the outset. That means you need to have a strong alignment and shared philosophy with your supplier at the outset, to make sure your partnership can weather the storm.
So what do you evaluate in the initial conversations with this new supplier to find out if that alignment is really there?
We’re big advocates of bringing business problems to technical supply chain partners on a regular basis, to challenge them to open new, high-value, differentiable opportunities for your business. If you’re being introduced to a new potential supplier and looking to see if you have a fit, ask them about:
1. The most difficult part of a significant development from their business. Ask specifically about the biggest surprise — the real challenge they never saw coming.
- A great potential partner is going to be honest and describe something that really, really sucked. They’re going to use it as an opportunity to highlight their team’s heroics and how they overcame the challenge. Beware of suppliers who cannot be real about facing a challenge. If they’ve never seen it, they’re the wrong people, and if they can’t be honest about it, how are they going to be transparent with you when it becomes really hard during your project?
2. Where they see a specific technology going in the next five years in your industry. Challenge them to defend the opinion.
- You want a supplier that is convicted about your approach and shares your strong opinion about where you are headed. Difficult things take a shared commitment; asking your supplier to defend a shared opinion early, and utilize some devil’s advocacy to test that convocation, is a great way to explore this early.
3. Something that everyone in the industry generally believes to be true about emerging technology that they completely disagree with.
- Great new innovations come with some controversy. The incumbents that are disrupted by the innovation will defend the conventional approach. Test your partner by asking where they disagree with the conventional approach and challenge them to defend it.
Testing Commercial Alignment
Talk early about the investment that both businesses are going to make in fielding a new and exciting solution for the market. There is both a real cost and opportunity cost to each new partnership. You should explore why it is a great fit for both of you, at a high level, and feel comfortable that your supplier’s conviction about that fit is real.
It is critical that the potential relationship and return for both you and your supplier are highly aligned, and testing this early is critical for any highly innovative product launch. When the product is going to be risky and innovative, the deployment will sap a lot of mindshare from your supplier — you want to be sure the reward and opportunity for your supplier is going to hold their attention and motivate the level of effort necessary to overcome any timeline, technology, or cost obstacles.
President & CBO