When selecting a supplier, quality trumps everything — including price.
This is the finding of a recent survey by Ray Products Co. of Ontario, Calif., a custom manufacturer of plastics parts.
The company surveyed 2,000 customers and contacts in the device manufacturing industry earlier this year. The responses were mostly unsurprising, but did reinforce one important point that procurement experts regularly tout: Collaboration between buyer and supplier is critically important.
This is especially true when suppliers have formidable technical capabilities and engineering expertise. The inclusion of suppliers in planning and making them viable, valued parts of business strategy can result in many benefits for buyers, most notably of which is proprietary technology.
A good supplier can help a company build a better mousetrap. The process starts with a good relationship, effective communications, and meaningful exchanges of mutual benefits.
The survey results grouped nine responses closely together. Quality emerged as the clear top choice, but the second-most important factor cited by respondents in selecting a supplier was a virtual tie among price, collaboration (listed as communication in the survey), technical capabilities, and engineering expertise.
Only 10 percent of the respondents rated price as their most important consideration.
Ranked slightly lower among the selection criteria were a supplier’s reputation, equipment quality, finishing capabilities, and experience.
There is, of course, little new in these findings. Unless a procurement manager’s expectations are disconnected from reality, it is understood that quality ultimately moves most transactions and that companies get what they pay for. Lowball a supplier and chances are that the vendor will make up for lost margins in a critical aspect of the buy-sell relationship.
The point is clear to Ray Products Co. and others: Quality sells, but only when it is part of a comprehensive approach to buyer-seller relationships that includes price, communication, expertise, and other business-building benefits.
It can never be repeated too often.