Strong Supplier Partnerships are About Much More Than Price

In a competitive industry such as metal stamping, choosing the right supply chain partners is crucial to success. Companies such as stamping die manufacturer Victory Tool, Inc. (Anoka, MN) understand that to consistently provide their customers with high quality products on time and on budget they must partner with suppliers who understand their expectations and are able to reliably fulfill their needs. For more than 25 years, Victory Tool has built some of the best metal stamping dies in the industry. They are well known for producing superior quality dies with aggressive lead times – a standard they have managed to maintain through several changes in ownership, as well as during economic downturns. In part, they credit their longevity and reputation to aligning themselves with supply chain partners who share a similar perspective on how to conduct business, including complementary corporate visions and missions, in order to achieve overall business goals.

Victory Tool began working with us more than two decades ago when we were launching our stamping division. Knowing their sterling reputation as a stamping die manufacturer, we called on them to share their expertise as our Impax Tooling Solutions® line of precision stamping tools was developed. In return for their insights, they were provided with good deals on products to put into their tools. Over the years, this customer/supplier relationship has grown into a mutually beneficial partnership. And while price certainly plays into the equation, both companies will agree that choosing the right partner is about much more.

“When choosing a supply chain partner we primarily consider three factors. The first is a high quality product that we feel our customer is going to be satisfied with so that they’re not coming back to us complaining about the products we put in their tools,” explained Fred Simonson, the general manager of Victory Tool. “Another key element is customer service, including how they handle correcting issues when they arise and how quickly they can deliver the product to us. Finally, whether or not they are competitively priced.” There’s no question that in order to maintain quality standards, high-end manufacturers need high-end supplies. Choosing a supplier that understands your product goals and can provide the right solutions from the start can save valuable time and effort that would otherwise be spent explaining your needs.

As a supplier, it is good to understand your customer’s product and needs. Knowing their products allows you to provide more strategic offerings, rather than canned solutions. As a vendor, spend a lot of time getting to know your customers in person and through phone and email conversations. As a result, when they have questions you will have a better understanding of their products and processes and can resolve their needs quickly. At the same time, the ability to leverage each other’s strengths and expertise adds significant value to the partnership. For instance, Victory Tool’s design group has a deep understanding of die design and manufacturing that enables them to build great dies that meet their customers’ needs. We utilized this knowledge and industry awareness when developing our Impax product line.

Conversely, Victory Tool can rely on companies like us to maximize the utilization of the die by requesting suggestions in our area of expertise, such as tool steel and coatings. As we work together, we build history and knowledge of these strengths and are able to reference previous results or apply those ideas to find new solutions together. Like most industries, tool and die manufacturers tend to be very protective of intellectual property. However, in order to support one another and solve challenging problems for our customers, there are times when specialized knowledge of a product, process or material must be shared. Naturally, with so much sharing of knowledge and expertise, integrity is key to fostering a healthy long-term partnership. In most cases, you’ll find the value of learning new things about our industry in the name of problem-solving far outweighs the risk of sharing potential trade secrets. This type of collaboration is how we advance state-of-the-art technology in our industry.

While some suppliers may prefer to engage in a contractual relationship with customers, where the customer is committed to purchasing a set amount of dollars per month, per quarter or even per year, others may be comfortable with a less formal relationship that is more often driven by personal relationships and rely heavily on whether or not a supplier can consistently deliver on performance, reliability, quality and customer service. The basis for this partnership becomes a matter of mutual trust, which is earned over time just like any other relationship: Does a supplier do what they say and say what they do? In other words, if you ask a supplier if a punch can be delivered tomorrow and they say yes, do they deliver? Similarly, if a customer agrees to specific payment terms, do they consistently follow through and pay invoices on time?

Flexibility is also an important factor in such a partnership. In the case of Victory Tool, their current ownership took over during a time when the business had not been doing as well and the economy was still struggling to recover. “In order to be successful during this transition of ownership we had to reach out to major suppliers like Wilson Tool and ask if they could extend their payment terms for a period of time and even accept multiple payment methods,” said Simonson. This type of financial flexibility is particularly important for small companies competing in industries with a lot of churn that doesn’t necessarily align itself with cash flow. An additional 30 days to pay an invoice may not seem like a lot, but for a small business it can make a big difference in cash flow and the ability to meet financial obligations.

In addition to mutual trust and financial flexibility, one of the biggest benefits of a long-term partnership is the cross-selling that these companies inadvertently do for each other. “Today, if a customer asks for a recommendation or simply does not specify a particular brand of stamping punch, it’s very likely that we’ll default to Impax punches,” noted Simonson. “The reasons are simple: Their customer service and delivery are excellent. They’re also competitively priced, especially for the high quality of the product we’re getting. We’ve even converted customers to standardize to their punches.” Likewise, when a customer of ours is looking for a precision die maker, we recommend Victory Tool and, because our customers trust our judgement and expertise, they know it’s a reliable recommendation.

Our experience shows that strong supplier partnerships are built on more than a vendor’s ability to consistently deliver performance, reliability, quality and customer service at a competitive price. The key to ensuring long-term success is to put the right people in place to foster relationships based on mutual trust and flexibility. As our industry continues to evolve, so too must our relationships with our customers and suppliers.