How To: Select a Supply Chain Partner

The best suppliers are master at managing supply chains. Be a master at qualifying them.
Table of Contents

Painful Common Mistakes ❌

I want the cheapest option.

Selecting your supplier based on price and not thinking about scaling early in the process is a key mistake most companies do.

  • Scaling needs expertise & resources, especially in a context of component shortage. Ask yourself that question: are expert & resourceful suppliers among the cheapest?
  • Remember that just because you designed your product internally, it doesn’t mean you know how to handle a supply chain past the prototyping stage. Manufacturing at scale is a totally different game.
  • Price is truly important but always in relation to the lead time and quality/features you get against it!

I want to control everything.

Going too deep into the supply chain trying to control every single supplier of every single part is a sign that you lack trust in your partner. If you don't trust your supply chain partner, don't work with him to begin with.

  • What's the point of selecting a supplier only to end up doing all of the work by yourself & doing it wrong on top of that?
  • Are you sure your qualification processes are better than a professional EMS'?
  • What is a supplier? It is a key partner for you handling a whole supply chain in the background. You should leverage that instead of providing weak Alibaba leads.
  • Have you heard about design for manufacturing and product validation?
  • Expect quality issues to arise: who is responsible for quality issues arising from customer-appointed suppliers? It might be impossible to define responsibilities which will dramatically slow down your project at best.

Focus on Success instead 🚀

Focus on high-level KPIs.

Contract on your business's most important KPIs in order to leverage your partner's expertise & resources into an obligation of result.

  • What’s your scaled target volume?
  • What’s the corresponding target COGS or MSRP?
  • When should you hit the market for maximum efficiency? Remember that once you’ve launched your crowdfunding campaign, what should go wrong will go wrong but you now have a hard deadline!

Focus on Investment, Marketing, Sales & Distribution.

Offload the rest to your supply chain partner within a clear project management process:

  1. Offload the engineering, manufacturing, supply chain & scaling complexity onto the right partner - supplier selection should be about that, not about price only! Do not trade your future scaling success against a better price on 50 prototypes, it does not make sense.
  2. Contract based on above target volume, target COGS & target lead time. Add some project execution & transparency guidelines.
  3. Now that you freed up a LOT of time & have an expert contracted on solving your complex problems, go focus on raising money and/or working on your market distribution to increase your chance of success.

We have received too many emails like the one below and/or heard horror stories of great projects that won’t be able to meet their customers on their promising market.

Hint: it's probably already too late.

Component supply issues usually means poor design choices or lack of execution speed or anticipation. Don’t fall in that trap by making the right choice from the get-go!