For many firms the method of having merely a tactical relationship (Just placing purchase orders) with suppliers is no longer an option. Increasingly complex customer requirements require closer collaboration and partnerships in order to meet the needs of the business.

However, without the right focus the relationship can flounder at the very start. The initial approach for many organizations is to launch supplier development or improvement initiatives. These are commonly initiated through supplier workshops or supplier days, these improvement plans can often be a good natured affair which unfortunately often result in very little. Lots get talked about, little gets achieved.

Why is this? Once cause could be that procurement professionals are just that procurement professionals the project disciplines required to launch an improvement scheme usually flourish when served by a cross disciplined teams or when the project lead has sufficient experience coupled with an effective process. Otherwise, you can find yourself in the position where lots of good ideas are developed/brainstormed but they stop there with the knowledge of how to exploit them.

And then there is the issue of what to focus on. For many organizations this mix concentrates on the traditional QCD approach looking at initiatives that cover

• Cost
• Quality
• Delivery Performance
• Lead time reduction
• Relationship management

But many benefits fall outside of QCD. Increasingly with today’s complex, fragmented and outsourced relationships much of the design and engineering knowledge sits within the supply chain. Exploiting this can be a challenge.

Clearly the first opportunity is in developing a relationship with the supplier where more than just tactical issues are tabled. This is often achieved within the environments of supplier development workshops where customers and suppliers come face to face to discuss how they can leverage opportunities or re-engineer processes (and in some cases the relationship).

What works best?
There are a variety of styles in managing suppliers from the combative (just do as we tell you) to the inclusive (how do you think it would work?).

My personal opinion of what works best is

• Discussions that are open and honest regarding challenges (on both sides of the relationship)
• Regular face to face meetings where activity plans and progress are assessed
• Meeting the concerns of both parties
• Joint agreement of the way forward

One meeting on its own will never solve all the operational issues, nor will ranting and raving at each generate improvements. The output must be to agree the targets and understand how they can be met through a suitable roadmap of activity. You as a customer and the they as a supplier will have individual constraints and opportunities and it’s important to understand those in order to avoid a relationship where expectations are unachievable (that is not to say you should let suppliers off the hook with targets – but at least understand where you stand).

Diagnostic
Before you start to develop the relationship try and ascertain the current position – ask yourself

• How is their performance
• How is our performance
• Look at QCD measures
• What is the state of the relationship
• What is my strategy and where do they fit in.
• What am I trying to achieve
• What would happen if I fail?

Be open to criticism – its always healthy to look in the mirror – welcome the opportunity for the supplier to explain what they think of you as a customer – do you cause problems? Are you responsive – what can you do to help improve performance?

Define your plans!
Development plans come down to the who, what where when.

• What are you going to do
• Who is doing it
• Where will it be done
• When will it be done by

Simply stating that we will improve on time in full delivery by 25% will not cut it (whilst it might be a worthy aspiration). Getting to the level of detail where you understand the series of steps that will be undertaken to achieve you goal will stand you in much greater sted of reaching it.

Summary
Aligning your supplier performance and relationship to your business objectives is crucial. Most businesses rely heavily on their supply chains and increasingly it holds the key to competitive advantage and efficiency. To be effective you’ll need to consider your approach (dictate/partner) and agree the priorities. These activities shouldn’t be set with a definitive end date but instead be incorporated into your continuous improvement plans be supported by the business and given the resources required to deliver.

Share and Enjoy: These icons link to social bookmarking sites where readers can share and discover new web pages.
  • Digg
  • del.icio.us
  • Netvouz
  • DZone
  • ThisNext
  • MisterWong
  • Wists

Comments

  • Follow us!