Key Criteria for a CM Supply Chain Organization

A CM’s (Contract Manufacturer’s) Supplier Selection is critical to the success of any given project. It is worth your time to find out more about the CM’s Supply Chain Team and capabilities. Supplier selection has increased dramatically in the last decades due to the advent of a truly global economy, and choices are many and varied. Having an experienced Supply Chain Team that can make smart choices is even more important in ensuring you are partnering with the right CM. Ideally, you are looking for a partner, not just a vendor, for a long-term partnership.

Things to look for in an effective supply chain organization:

Does the CM’s Supply Chain Team think globally, yet act locally?

A CM’s (Contract Manufacturer’s) Supplier Selection is critical to the success of any given project for both quality, schedule, and cost reasons. Does the Supply Chain Team have a Global presence and understanding when required? Are they able to personalize their interactions by having a local presence on a global scale? This ensures the relationships are conducted in a “local” fashion independent of whether it is an offshore partner or a local partner.

What is the size and experience level of the CM?

Does the CM invest in an experienced, multiple person staff? Is the respective Manager a seasoned veteran? Where in the organization does this Team report? It should be a key team and highly visible within the executive group. They are one of the most important elements the CM has in developing and maintaining long term partnerships with customers.

Is the Supply Chain Group capable of adjusting their suppliers at each phase of a customer’s “ramp”?

Seeking a CM partner that can support you through your production ramp by adjusting their supplier selections as required, is critical to your seamless transition from prototype to high volume production. Knowing when and how to efficiently switch suppliers, based on their respective skill sets, is core to your CM’s capabilities as they support your ramp. This allows you to focus on other elements of your growing business and places the burden on your CM partner to effectively manage the dynamic supply chain.

How do they vary their selections and practices to support their certification requirements?

Dependent upon what certifications and procedures may be required for your product manufacturing it is important to understand the Supply Chain Team’s experience and breadth in selecting the correct suppliers specific to your needs; Medical Device- 13485 criteria or Defense & Aerospace- AS9100 and/or ITAR criteria or Semiconductor and/or Consumer Electronics- SEMI S2, S9 compliances and/or UL508A registered or CE certification etc. Do they have a full understanding of the respective certifications and compliances as they relate to supplier selections? What documentation can they show you as examples of their selections?

How do they develop and strengthen their supplier relationships?

Do the CM Supply Chain Team and the Quality Team routinely visit and audit their suppliers? It is good to understand how interactive they are with their supplier network. Performing routine audits and engaging in face to face visits is an important aspect of maintaining quality products and relationships with their suppliers.

Does the CM award or recognize their high performing suppliers? This can be reflected in many ways but is a good indicator of the strength of their relationships with their suppliers. Does the CM Supply Chain Team have an AVL (Approved Vendors) list? It is worthwhile to understand if they do and how do they establish and maintain that list over time.

It is also beneficial to ask if and how the CM Supply Chain Team measures its suppliers. Once a supplier has been chosen and qualified, metrics and measurements are incredibly important. Most systems can track on-time delivery and rejection rates and these should be used at a minimum to track supplier performance. This information should be documented and fed back to the supplier at regular intervals. These metrics are good to use as a basis for Quarterly Business Reviews (QBRS) with the supplier. If it is apparent that supplier performance is declining, the root cause needs to be determined, so the issues can be addressed. Feedback, both negative and positive is fundamental to improving performance for all parties.

How do the Quality and Engineering Teams work with the Supply Chain Team?

Typically, in well-organized CM’s the Quality and Supply Chain teams work in concert with each other to ensure their AVL suppliers are performing to expectations and following all required procedures. It is worth checking. Does the CM have documented processes and procedures which are used between the Quality Team and the Supply Chain Team? Are the Quality and Supply Chain Teams interacting at a high frequency- daily interactions etc.? What procedures and policies are routinely reviewed between the groups? Are there feedback processes in place?

Risk Mitigation

How effective have you managed risk to your supply chain? If Supplier A is unable to deliver, do you have a backup or plan in place to bridge any disruption? Given the unpredictability, of this current year, this has become key. It is always good practice to rate suppliers in terms of risk and have a back plan in place. Can additional safety stock inventory be held to mitigate any supply chain disruption?

In Summary

The Supply Chain Team is critically important to a CM’s success, growth and maintaining their long-term relationships with both their customers and their suppliers. If they have the attributes discussed above and can demonstrate those to you during your investigations, then you are well on your way to have made the right selection in your CM evaluations.