Over the past thirty years I have had the honor and privilege of working with over a hundred companies around the world; big and small, across virtually every industry. It is no surprise that virtually every company wants to have a world class supply base. Category Managers perform competitive analysis to find such suppliers. Suppliers that can deliver world class products or services, with the highest level of quality, leading edge technology, on time every time, while heeding environmental regulations and doing all this at a lower cost than anyone else. A tough order, indeed. Yes, there are such companies but there is a problem for the buyer. The best in class companies are selective with who they do business. If you want to deal with them, you must show that you are a world class customer yourself.
It is strange that Procurement professionals seem to think that every supplier is dying to do business with their company and willing to be humiliated by arrogant buyers who focus on nothing other than price, price and price. Guess what? Only the desperate ones will take whatever the buyer throws at them. If you want to have the best suppliers, you have to act like a world class buyer. This means being thoroughly professional, extremely tough but wonderfully fair. No one expects a good customer to be a pushover. A good customer is well prepared and pushes the supplier to greater efficiencies and performance, innovation and cost competitiveness. All in the spirit of collaboration. Being prepared means doing your homework, knowing your supplier and the market. Creating an environment of open dialog and genuine win-win strategies goes a long way in attracting and maintaining the best supply base.
The late Dave Packard, founder of Hewlett-Packard, had an interesting way of explaining the right approach to Supplier Relationship Management. When he heard that I was training a lot of Gene Richter’s Procurement folks around the world in Cost Management strategies he told me, “since you are going around the world of HP, teaching Gene’s team, could you pass along a message from me, please? A dissatisfied customer could cause great harm to HP. However, a dissatisfied supplier can shut us down or hold us behind on innovation. So, tell these Procurement guys to treat their critical suppliers like HP would treat our best customers”. That is so profound. How many buyers would even consider these wise words? Treat your critical suppliers as you would your best customers.
Some companies have established guidelines for buyers who have suppliers visiting from other cities or countries. Here is a checklist if you are interested:
Now you may wonder why one must go through such lengths with “hosting the supplier”. Think about it. Would you want to be the first to get access to a supplier’s innovation? Or, in the event of a shortage of supply, would you want to be first in line for allocation? Or, would you like to have your supplier work closely with your engineers to find ways to maximize the efficiency of your supply chain? Relationships are made between PEOPLE; not between companies. In a crunch, it is that personal call to your supplier that will resolve a critical issue or provide a competitive advantage for your company.
So, work on building relationships that are meaningful, professional and based on a common goal of making BOTH, your company and your supplier, benefit from the relationship.
In the next article we will discuss ways to engage a supplier in processes that drive breakthrough solutions.
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