Business & Technology Nexus

Dave Stephens on technology and business trends

R-E-S-P-E-C-T

with 2 comments

Last time I talked with Pierre Mitchell he was an AMR superstar. At Oracle, we regarded him so highly we had him come in and advise us on how to position what we would later brand “Advanced Procurement.” In my book, he’s a true Procurement expert.

And lucky for me, Pierre was kind enough to get back in touch recently. I can see his move to The Hackett Group has afforded him brand new challenges. Thanks Pierre for all you are doing to push the cause forward!

Pierre passed along some really interesting data on a measure of Procurement success all too often overlooked: Supplier Working Relations. Everyone knows it’s important to measure how happy your customers are – but few extend the same consideration to their all-important supply chain.

Although data is scarce, my belief is that, especially for manufacturers, a healthy working relations index is good harbinger of future success. Of course this doesn’t mean being soft on your supply base. But it does mean being concerned with their viability and profitability. Instead of focusing on margin transfer (increasing your profits by decreasing your supply chain’s profits), leading companies want their supply base to enjoy reasonable margins & success. And in today’s competitive markets, a supplier’s favorite customers get all their best ideas – ideas to improve products & ideas to lower overall costs. Conversely, the pain-in-the-behind customers all too often get the silent treatment from their reluctant supply base.

How well do your suppliers like working with you? Are you their favorite customer? Do you have a program to ensure you give the R-E-S-P-E-C-T that keeps your all-important supply chain on your side?

If you lack a formal program to measure the satisfaction of your supply chain, perhaps starting with a survey of your most strategic suppliers is a logical first step. The questions can be quantitative or qualitative, the most important thing is to ask them! Here are some ideas to get your started:

1) How easy are we to work with as a customer?

a) very easy b) easy c) so-so d) not easy

2) How true is the following statement: My company’s ideas to improve product quality are encouraged and respected

a) very true b) mostly true c) somewhat untrue d) untrue

3) What are the 3 most important things could we do to improve our relationship with you?

I’d love to hear about any programs you decide to run (or have already completed) in this area & any measurements on program effectiveness. Good luck!

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Written by Dave Stephens

03/31/06 10:49 PM at 10:49 pm

Posted in Opinion

2 Responses

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  1. One of my clients is currently implementing an “Enablement” measure in their supplier scorecard. This is a measure of how well the client has enabled the supplier to perform their service e.g. accurate timely requests, prompt payment etc. We have no data yet but just by implementing the measure the client is moving up the supplier’s list of favourite clients.

    hudgeon

    04/4/06 12:30 PM at 12:30 pm

  2. I suspect Pierre was also referring to the work of Dr. John Henke of Oakland University. Dr. Henke’s consulting firm developed a supplier “working relationship index” for the automotive OEM industry. I saw him present his findings at a recent SRM conference, and the results were fascinating. He developed quantitative proof that adversarial negotiation styles in the automotive industry correlated to poor supplier relationships and – more importantly – inferior corporate performance. Any guess on the OEM that had the highest index ratings? Toyota, of course.

    Don MacLennan

    04/10/06 2:59 PM at 2:59 pm


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