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Old 13th June 2018, 02:06 PM
Wes Bucey's Avatar
Wes Bucey

Total Posts: 11,169
Re: How to verify the actual capacity of suppliers

One of the questions Primes in most industries fail to consider is the difference between "production capacity" and the amount of capacity (as a percentage of "production capacity") any given supplier is WILLING to allocate to any single customer. (Smart suppliers do NOT put all their eggs in one basket lest they put themselves in a position to be bullied by an aggressive customer or devastated by an unexpected disaster befalling a major customer.)

All in all, total transparency between customer and supplier on ACTUAL needs and plans for ramping up makes better economic sense in the long run. Working with an aware and trusted supplier can be to the advantage of both parties. Knowing plans and aspirations of some of our customers, we were able to suggest alternate manufacturing methods which ultimately resulted in MUCH LOWER unit costs rather than just ramping up current methods or allocating more machine time on one kind of machine.

With assurances of increased sales, we were willing and able to finance new and different equipment capable of increased efficiency (defined as lower unit costs) as well as increased capacity to meet a customer's needs, allowing us to turn previously used equipment for shorter runs for other, new customers, maintaining our percentage balance of customers.

Smart suppliers do not want to run a zero sum game; they want and need to expand capacity and sales, not just shuffle sales from one customer to another.
Thanks to Wes Bucey for your informative Post and/or Attachment!

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