The Neumann Engineering Story

In the early 1990s, Neumann Engineering faced a major challenge when their primary supplier of high-grade steel went bankrupt. The company was in a precarious position, but the leadership, led by CEO Hans Neumann, decided to turn this challenge into an opportunity to establish more resilient and long-lasting supplier relationships. Here’s how they did it, along with tips you can apply to your business.

1. Prioritize Communication

Effective communication is the foundation of any strong relationship. Neumann Engineering established regular communication channels with their suppliers, ensuring transparency and trust.

2. Foster Mutual Respect

Treating suppliers with respect and valuing their contributions builds a strong partnership. Neumann Engineering ensured that all interactions with suppliers were respectful and professional, creating a positive and collaborative atmosphere.

3. Commit to Fair Practices

Fairness in negotiations and transactions is crucial. Hans Neumann insisted on fair pricing and prompt payments, which fostered trust and reliability with their suppliers.

4. Invest in Supplier Development

Investing in your suppliers’ growth can yield significant returns. Neumann Engineering provided training and technical support to their suppliers, helping them improve their capabilities and performance.

5. Establish Long-term Contracts

Long-term contracts provide stability and assurance for both parties. Neumann Engineering moved from short-term agreements to long-term contracts, ensuring a stable supply chain and fostering deeper relationships.

6. Share Strategic Information

Sharing relevant strategic information helps suppliers align their operations with your business goals. Neumann Engineering regularly updated their suppliers on market trends and business plans, enabling better coordination and planning.

7. Collaborate on Innovation

Collaborating on new products and processes can strengthen your partnership. Neumann Engineering involved their suppliers in the innovation process, leading to joint developments that benefited both parties.

8. Address Issues Promptly

Promptly addressing any issues that arise prevents small problems from escalating. Neumann Engineering established a dedicated team to handle supplier issues, ensuring quick resolution and minimal disruption.

9. Recognize and Reward Excellence

Recognizing and rewarding suppliers for their excellent performance fosters loyalty and motivation. Neumann Engineering introduced an annual Supplier Excellence Award, which incentivized high performance and innovation.

10. Build Personal Relationships

Building personal relationships with key supplier personnel can strengthen the business bond. Hans Neumann and his team made it a point to visit supplier facilities and attend social events, creating a more personal connection.