As companies grow and evolve it is statistically inevitable that supply partners will come and go. There are many reasons why a company may want and/or need to transfer supply partners such as supplier financial instability, poor quality performance, and production supply disruption. High growth technology companies often face unique challenges brought upon by growing sales which can in turn drive increased manufacturing capacity, tighter customer quality tolerances and shorter lead times required by new customers. These new product requirements can cause initial early stage supplier alignment with your company to drift and eventually cause misalignment. When major misalignment occurs we have found that often, it is better for a supply transfer.
Although the root cause of companies needing to transition suppliers may vary it is important that high growth companies have a plan to effectively and quickly transition production supply to ensure long term company financial stability, quality end products and ongoing production.
Five steps our team leverages to create a smooth production supply transfer:
1. Supply Transition Communication:
Draft and distribute clear and direct communication to outgoing suppliers to notify suppliers why the production supply is transiting and outline and associated tooling transfers. Based on our experience, clear and concise supplier and tooling transfer communication with deadlines can dramatically reduce component and tooling move timing while reducing supply chain risk.
2. Tooling Identification & Quality Check
Conduct onsite outgoing supplier tooling audits. Based on our experience outgoing suppliers should not be left to prep tools for transfer as there is priority misalignment which can disrupt supply.
3. Part Bank Builds and Transfers
Oversee part bank builds and/or final part builds and final shipments to the final assembly plant/s. Based on our experience this critical step should not be left to outgoing suppliers to ensure proper final part assembly, part bank builds and part shipments.
4. Tooling Transfers
Oversee tooling packaging and transportation to transition tools to new suppliers. Based on our experience this critical step should not be left to outgoing suppliers to ensure proper handling and timely transfer.
5. Tooling Arrival & Launch
Oversee tooling arrival and launch at new supplier/s. Based on our experience this is a critical step to ensure new suppliers quickly ramp up production to ensure continuous supply.
We hope the above production supply transfer steps provide you and your team with a helpful high level guide to ensure continuous production supply as you scale your company.