With a more complex supply chain due to more players and reduced reliance on China, the question was asked of supplier leaders if customers would be willing to pay more if it led to a stronger supply chain that was more reliable.
The question was tackled by Gino Amador, president of Snap-on Equipment, and Eric Sills, CEO of Standard Motor Products during the MEMA Aftermarket Suppliers Vision Conference. They emphasized the critical balance between cost and resilience, highlighting the lingering impacts of past supply chain crises and the evolving expectations of customers during the session The Race to Mexico … and Beyond.
“Nobody will pay for theoretical resilience. But everyone will pay for actual resilience when the other guy can’t show,” Amador asserted, capturing the practical reality of customer expectations.
He then impressed upon the industry to build strong resiliency measures by paraphrasing an old proverb: “The people that are resilient don’t pray for an easier time, they pray for stronger shoulders.”
Sills empathized with consumers, understanding why supply chain resilience is a hot topic.
“I think it’s because there continues to be a certain amount of PTSD still coming out of [how] the supply chain was in the last couple of years,” he said, referring to the pandemic that left the aftermarket with empty shelves at times.
This ongoing concern drives customers to seek assurances from suppliers about their ability to withstand future disruptions, Sills added.
Customers, he further noted, are increasingly wary of relying too heavily on China.
“They’re expecting us to reduce our reliance on China. We’ve been talking a lot about supply chain diversification, the ultimate source of supply, so on and so forth. And so it’s clearly top of mind for them,” he explained.
This presents an opportunity for suppliers to demonstrate their supply chain strategies.
“We do satisfy a lot of what you’re expecting,” Sills said.
However, Sills acknowledged the challenge of balancing resilience with cost competitiveness.
“As the shelves get replenished … they may be willing to pay a little bit more, but not a lot more,” he said.
Customers expect suppliers to remain competitive while mitigating risks associated with low-cost products from China.
“It’s an ongoing dialogue with all of our customers. And I think that there’s receptivity to it. But it’s still going up against the low-cost product and people will take some risks with that,” Sills said.
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