Motorcycle, ATV

Gary Gustafson Blog 8-13The Chinese military sage Sun Tzu said: “If an army does not seek out allies, it will be isolated and weak.” Here are some more tips for vehicle manufacturers to turn suppliers into allies based on a couple of decades in roles on both sides of the negotiation table.

1) Source wisely in low-overhead nations

When the cat’s away the mice will play. Many UTV and Motorcycle OEMs and accessory manufacturers have learned the hard way that dealing with a distant stranger can carry plenty of downside along with the upside; therefore trust should be proportional to the familiarity that is established.

The overall rules of thumb for offshoring are as simple as the rules at a traffic light. You’ve got a green light to source catalog items that are not considered intellectual property as long as they are tested to ensure their safety. Envision a yellow light for parts that are one-offs. Although they are similar to components the supplier already makes, these should be treated with caution until a process for doing business, including engineering change orders, is established. Unfortunately there’s a red light staring you in the face when offshoring components and systems that are white-sheet designs or those that require intellectual property protections.

To get the green light with engineered systems you need to base one of your own personnel at the supplier, or have a trusted account management person acting as a liaison with them. Some western corporations have Wholly Foreign-Owned Enterprises in China and other countries. These suppliers can combine seamless access to North American sales and engineering with low-cost manufacturing labor and overhead.

2) Seek technical and big-picture advice

Some companies, like some cowboys, are all hat and no cattle. Therefore engineering should be involved on new programs to ensure that a supplier is technically capable and not just spouting buzzwords and low prices (See Specification for Success – another blog).

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