Every company wants better customers. As such, several attempt to pursue a long-term relationship with an original equipment manufacturer, or OEM. Several companies try, few succeed, and most fail in their pursuit. However, even those that fail become better companies because of that experience. So, if you’ve ever wanted to sell direct to and OEM, but simply don’t want to fail on your first try, then here are some key aspects of making your first attempt your best attempt.
1. Above All Else, Equipment Manufacturers Expect Quality
Don’t bother trying to tout your company's quality: Original equipment manufacturers expect quality. It's a guaranteed part of the equation. Your company’s ability to meet their strict quality requirements is a prerequisite to getting started. These companies expect nothing less than perfection, and rightly so. They can not afford any issues with their own production because of sub-par product from their suppliers.
2. Equipment Manufacturers Need Vendors Who Use Best Business Practices
These companies simply aren’t interested in vendors that aren’t able to keep up. They don’t have the time, or inclination, to train your company on the how and why of properly servicing them. Therefore, first and foremost, your company must have that level of professionalism that sets you apart from your competition. This means you must adopt best business practices. You must have that dynamic sales and customer service team, the ability to respond to any delays, and the inventory, and production capacity, to respond to increase demand at a moment’s notice.
3. Equipment Manufacturers Need Corrective Action Reports
Granted, I’ve said how quality is absolute, but problems still happen and equipment manufacturers understand that. However, what they will not tolerate is mistakes that occur again and again. Essential to making your relationship work with is your company’s ability to provide corrective action reports to resolve mistakes. You need to have the internal processes with your quality control department to implement those corrective actions. Do what you say, and say as you do. Live by that motto. Your company must have a proactive corrective action plan to resolve issues and the ability to track your actions to their successful conclusion.
4. Most Manufacturers Want ISO-Certified Vendors
Most people are unaware of the impact or importance of being ISO-certified. The fact is, all ISO certification does is establish a set of norms and practices your company will always follow. Equipment manufacturers need this because it guarantees that when you provide them with that previously mentioned corrective action report, that something will actually come of it. You set your own procedures and policies in ISO. Your company is in charge of making all the necessary checks and balances that go into making the certification a success.
I’ve been in companies with hundreds and thousands of employees, who had short, to-the- point, and easy work instructions for their ISO policies. The manual for these companies was simple and short. On the other end of the spectrum, I’ve been in companies with fewer than 50 employees who have the most convoluted, complicated and debilitating work processes as part of their ISO procedures. Their manuals were encyclopedias. Suffice it to say, it ruined their customer relationships. You must find that happy medium between protecting your quality of work, and making it so complicated that nothing can be done.
The relationship that exists between equipment manufacturers, integrators and end-users is a valuable one. When you begin a relationship with one of these companies, it opens up other markets. To learn more please go to: Defining Strategic Partnerships Between VARS, Integrators & OEMs
5. Original Equipment Manufacturers Need Competitive Prices and Top-Tier Vendors
A number of people assume that excellent quality products equals higher prices. In some cases, it might. However, equipment manufacturers work under the same market forces as any other company. As such, they simply can not afford to have suppliers and partners who aren’t competitive and aren’t top-tier manufacturers.
You must not only provide products on time, and in the volume they need, but at competitive prices. Key to your success is your company’s ability to offer competitively priced products to your customers. If you are a manufacturer, that means increasing your productivity rate, lowering your cycle times, and eliminating overtime – sounds impossible? Well, it doesn’t have to be. If you want insight into how to do this, please read the post "Essential Cycle Time Analysis: Cost of Manufacturing Lost Time"
6. Equipment Manufacturers Need Shrewd Negotiators Who’ll Protect Their Own Interests
This is often forgotten by a number of companies. They think that they should capitulate on each and every request made by an equipment manufacturer. For some companies, they see giving the customer everything they need, as a sign of good customer management. It isn’t. These enterprises expect your company to be strong negotiators, ones who will make sure the agreements you reach with them will be successful. I can not stress this enough.
When an OEM gets into a negotiation with a supplier, and that supplier displays a lack of knowledge, or gives the impression that they’ll acquiesce on every request, the equipment manufacturer will become concerned that the supplier is unaware of what they are getting involved in. Or, at the very least, that the supplier has no experience at all in what it takes to make the relationship work.
The above video explains the essentials of negotiation.
Protect your company’s interest at all costs. This means the inventory, production, parts, materials, and labor that’s allocated to servicing the OEM is protected. Negotiate strongly, and make sure your contractual agreements protect your interests. These companies expect this as part of the discussion.
This is the one instance where giving in on everything will kill your opportunities. There are numerous benefits to working with original equipment manufacturers. However, you must act like you’ve been there before. These companies expect to work with vendors who know what it takes to make the relationship work. Don't give in too easily.
To read more about dealing with original equipment manufacturers, please read: Sales Strategies When Selling to OEM’s, Integrators & End-Users
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