Subcontractor’s move from ‘bid-and-win’ operations to strategic collaboration

Are you a supplier or subcontractor looking for opportunities to deliver a superior value to your customer-OEMer? Do you experience your profitability is too low due to high calculating and quoting costs and poor chance to score? Or perhaps you have noticed your customers’ try to simplify their processes by cooperating with less, but highly qualified suppliers.

The traditional obsession with costs and price reduction is giving way to a far more constructive approach to build relationships between OEMers/Tier 1-2 and subcontractors. OEMers/Tier 1-2 aren’t cooperating with subcontractors merely as providers of a critical component or service, but as strategic partners that help to respond to new market demands with agility and innovation. Rather than just supplying to order, both parties engage into a strategic collaboration to transform product design and delivery, align operations, and drive mutually beneficial business processes. The sourcing company has clear reasons for this. Besides simplifying processes, a key motivator is a greater opportunity to leverage core technology and manufacturing capabilities of suppliers and gain competitive edge.

Often strategic collaboration is structured as a program. However, it goes beyond the paper agreement between two parties. The essential attributes of a strategic partnership that should be incorporated into a business of subcontractor are co-engineering, integrated supply chain, management of customer product data, connected IT systems.

What are the pain points that might hold you back?

The theory sounds great…  But will it work for me? Strategic partnerships inevitably involve challenges; however, a good start should ensure a scalable and sustainable collaboration model. Here are some questions you might be already considering:

  • Which customers would be candidates to pilot with? Moving into strategic partnerships means the selection of a limited set of core – future – customers and saying goodbye to many current clients. To qualify for the development of strategic relationship with a selected customer four criteria are primary in place: (1) deep understanding of the customer’s strategic choices and their key supplier selection criteria, (2) trustful relationship with decision makers at the customers’ side, (3) definition of your key technology and manufacturing capabilities that create a competitive advantage, and (4) capabilities criteria crucial for your customer that you (potentially can) outperform.
  • Do I have the right and sufficient resources in my organization, that I can assign to the program to develop a strategic cooperation with the pilot and the first set of customers? The program of developing strategic relationships requires various areas of expertise. Among others, most prominent are Engineering, Supply Chain Management, Account Management, Manufacturing Engineering, Customer Service and Legal.
  • Am I the right leader to guide my organization and keep it motivated throughout this process? Let’s be honest, change leadership is never easy. The organizational transformation often requires different competences and approaches at different stages. Some organizations feel they have a strong internal team to drive transformation, other seeks for external advice and interventions.
  • Do I have the funding for the start-up investments in place? The commencing period of 1 to 2 years to “develop” customers need funding before there is a steady revenue stream. There might be out-of-pocket costs in IT-systems and in smart manufacturing techniques. Plus, you need additional capacity inside the program from your own team or cover it by temporary staff. Last but not least, you might need to recruit new staff which are not fully utilized at the beginning.

Are you considering a move towards strategic collaborations? With Mobina this becomes a reality!

We offer a unique software tool in which (top) management can outline and control this complex transition. As a manager, you always have an overview on how the transition is moving forward and can you manage the associated risks. An active role of the line management ensures you have the necessary information and the organization is empowered. Using Mobina software you:

  • mobilize your organization for change,
  • get access to extensive and relevant knowledge and experience from the industry,
  • guarantee consistent and continues documentation of your business, target states and transition;
  • have an overview as management on how your organization is evolving,
  • ensure your IT landscape is aligned to your business processes

Curious about how we can help you or how such a transition can look like? Give us a call or send us an e-mail and we will get you in touch with one of our specialists!

Do you want to get more information? Check out our blogs.

Want to know more about what Mobina can do for your enterprise’s future?

Contact us today. We look forward to getting to know you and your company.

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