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Jeff Colvin
Management Consultant & Founder of Link,
a Management Consulting Group
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Without
our suppliers our customers would be very unhappy! The movement
for supply chain controls and management has never been more prevalent
than in our current global marketplace. The need for systems and
processes to manage the complexities of design and delivery throughout
the value chain is a necessary part of doing business today.
At the centerpiece of supply chain systems is the supplier/contractor
relationship. Once again, the people side of the equation may be
one of the most crucial in determining business success.
I was recently retained by a large defense contractor to conduct
some intelligence gathering around the subject of best practices
in the high-tech world of supplier management. Having spoken with
6 senior managers in companies like HP, Applied Materials, and Flextronics
I learned that the fairy tale view of partnering was treated most
often by the following quote, "Partnership is bull shit, we
have a business to run."
Beyond the hard line need to establish low prices and assure absolute
accountability, the intent of these Fortune 500 companies was to
create a real working relationship complete with full disclosure
and openness of business models and profit motives.
Some real nuggets of supplier management technique were learned
through these interviews. Incidentally none of them revolved around
any specific software tools or pre-packaged systems. Instead the
words of wisdom and success came from the ability to manage the
expectations of the people and the business right from the start.
- Define and divulge the profit model and align financially with
common goals
- Put an account manager in charge of each supplier 100% of the
time (become part of their infrastructure)
- Establish a working relationship with all the key people in
an initial "breakthrough seminar" (2 to 3 days)
- Nothing can be hidden, provide early and full disclosure "By
the time I hear about it, it would be too late; need to be Johnny
on the spot"
These and many other bullets of supplier management were fit into
a matrix broken into four distinct areas for further translation
to value; strategy, tactics, behaviors, and measures. Each of the
elements of sourcing and management were evaluated relative to these
four components and used as a vehicle for comparison to the benchmarked
best practices.
The next steps are defined by the following continuum built around
the current practices and processes.
- Validation and reinforcement
- Re-education and accountability of behaviors
- Re-design or re-engineering
To my client these efforts in improving their supplier working
relationships could have hundreds of millions of dollars of impact.
What is the impact to your business?
To read the white paper regarding this benchmarking study, just
ask.
Supplier Working Relationships
Establish the Foundation
- Understand the business/profit models
- Balance the requirements
- Establish trust, respect, & communication
Select the Right Supplier
- Evaluate previous experience with similar requirements
- Ensure technical & management competency
- Require access to financial and progress data
Manage the Relationship
- Hold a launch meeting to set expectations for all
- Initiate a real time vehicle for information sharing (e.g. online)
- Routinely visit suppliers on site
Set Up Response and Recovery
- Establish a chain of accountability
- Define a ladder for escalation and dispute resolution
- Apply lessons learned from successes and failures
Jeff Colvin (Jcolvin@linkllc.com)
founded Link, a management
consulting group in 1997 whose mission is dedicated to the Systems,
Structures, and Behaviors that make people and companies successful.
Link's bottom line focus on process improvement is achieved through
the facilitation and training of cross-functional teams to address
key strategic goals. Learn more about Jeff
Colvin & Link...
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