succeeding with compatibility, transparency and trust in high tech - circuit board assembly

High-tech contract manufacturing is a booming industry with revenues of over $1 billion a year.
Is it possible for small businesses to compete and thrive with big Chinese companies?
Scott Schroeder, owner of Corvalis, reelam, Oregon, said he found a secret weapon.
Not competitors.
In the transactional "unit price" business, RelianceCM focuses on building long-term relationships with customers, aiming to add strategic value to their manufacturing needs.
Schroeder explained.
"The essence of contract manufacturing is around the transaction.
The customer releases a specification and gets three bids, all about the price, the price.
We are both small businesses and our base.
We can't compete on labor costs.
We have to come up with a different approach.
Different ways?
Focus on building boards and building relationships.
Schroeder's main initiatives for cultural fit and compatibility are to replace the sales manager of reliecm ecm with a customer relationship manager. The goal?
Look for customers with the best cultural fit and compatibility.
"The logic is simple.
"We believe that the best opportunity to improve the level of trust is to build a good cultural fit and compatibility with our customers," he said . ".
RelianceCM has a creative way to measure the "fit" with what potential customer Schroeder calls a "dinner test ".
"The Dinner test is simple and effective.
This is an informal judgment to "Will you take this person home for dinner ? " End.
Schroeder started the dinner test when he met the client-preferably at dinner-to talk about their relationship.
"In the normal course of discussion, such as personal ethics of people, you can certainly gain some insight.
For example, is this person more concerned about the transaction or the overall result?
It's really simple.
When we cross with people who don't meet the "dinner test" criteria, we don't do business with them.
"Because you can see that the buyer is a hammer, reliancececm has given up its business with some big companies;
All they have to do is push you down.
This is not an acceptable basis for relationships.
The major shift in TransparencyA's path to building a better relationship with customers is to become more transparent.
Schroeder admitted: "The change to complete transparency with customers is a huge leap for us . ".
Like many companies, RelianceCM never shares data that it considers sensitive because it is concerned that customers will take this information and share it with competitors, or use it for them.
Schroeder called it "wrong distrust ".
"RelianceCM overcomes the reluctance to disclose its bill of materials (BOM)
: "Our business revolves around BOM, which contains information about the manufacturer, part number, and cost data.
Of course, it is much easier to choose trust and be transparent to customers who have successfully passed the dinner test.
He added, "Transparency is one of the key factors we find, and when we start building relationships with our customers, it gives us credibility and trust.
The more transparent we are, the more transparent and open our customers are.
"Once RelianceCM feels comfortable sharing things like BOM, the company takes it to a new level and shares more information such as profit margins and profitability.
The response was refreshing.
"I don't think we have a debate with us that our margins are too high or too low," Schroeder commented . ".
"On the contrary, what happens is that we can have facts.
Based on a discussion of how RelianceCM can add value to the money they pay.
As RelianceCM shares more with its customers, it finds that it can add both value and be integrated upstream into the new product launch plan.
Although reliability may not be cost-effective for customersvolume mass-
Production needs, discussions quickly help RelianceCM realize that this is a perfect start as a trusted partner
Transparency and deep integration are essential requirements.
Schroeder saw the impact.
"In the past, not only did our customers outsource board assembly.
But as they begin to trust us more, they begin to outsource the final assembly, testing and distribution of the final product.
TrustSchroeder has seen that the level of trust with customers has increased.
"Trust comes directly from a conscious effort by RelianceCM to ensure that it works only with compatible customers, and we lead in a transparent way.
Schroeder tells about his experience in becoming a medical device OEM for new customers.
"Once we start working with our customers, our compatibility and transparency will redouble our efforts.
An integration happened.
We had our relationship manager, Patty Baker, go to their office at the same time every Tuesday and she quickly became part of their team.
We openly share what we are doing and in return customers are more willing to share what they are doing.
This company was sold a while ago, but our relationship with it is still strong because we have a deep trust relationship throughout the organization.
Usually, as clients, we will be very concerned about "the new sheriff in town", but in this case, we know that we have strong advocates and champions at all levels in their organization.
We have become a trusted partner.
What is the bottom line?
The bottom line of RelianceCM, Schroeder said.
The early results surprised him.
In the first year, RelianceCM's revenue doubled.
"We had a perfect storm with two customers.
We consciously strive to be transparent and drive Trust, which helps two key customers to feel comfortable with the big growth of our business.
Revenue continues to grow.
Revenue growth is reasonable, Schroeder said.
"Companies like to do business with suppliers they trust.
Transparency is not what a typical contract manufacturing company does.
Therefore, it is easy to understand why customers like our transparency.
"Reliancececm Schroeder is the most satisfactory increase.
"Our profit margin is much higher," he said with a smile.
"A key reason for the increase in profit margins is that RelianceCM is comfortable with sharing the risk/shared return economy with customers.
"When you know that you work with ethical people in a transparent way, it helps us to take higher risks with our customers.
While we have been focusing on the product Board stuffing in the past, we have been able to build strong relationships with customers who trust us to do more for them.
"Over the years, we have built a niche around helping companies launch new products.
New product launches require more skills and higher risks than the old transactions and commodity businesses we previously worked on.
Because we take higher risks, it will bring higher returns in terms of profits.
The way I look at it, as long as we know what we are facing and we are trying to work with our customers in a transparent way to reduce risk, we can operate in any environment.
Schroeder is most interested in the fact that his sales costs have fallen sharply, with about 80% of new projects coming from customers ready to buy.
"This is a complete flip
We used to just knock on the door and try to make a deal.
Schroeder concluded, "We are not perfect in any case, but when we focus on ways to improve our compatibility, transparency and trust with our customers, we find that we have a healthy relationship with healthy profits, which is very beneficial to our industry-especially when you think we are competing with low profits --
Cost manufacturers in China.