Business Model:

Value Chain Management

Supply Chain Management (SCM)

Teaming Up With Your Suppliers

Teaming Up with Suppliers

In today's era of systemic innovation characterized by the need for speed and flexibility, all along the value chain suppliers and customers are tearing down walls. "Old, adversarial relationships in which the buyers push for lower prices and higher quality while sellers push for just the opposite are pretty much a hallmark of losers these days."² If your company really wants to operate efficiently and win customers you should team up with your suppliers rather than bargain with them. When you give up the notion of the winner-loser zero-sum game and start working together with your suppliers, you can please more customers down the line and create a win-win situation for both of you. So rather than just haggle over prices, quality and delivery schedules, work to align your processes and eliminate the friction that costs you both time and money.

Deming's 14 Point's Plan for TQM

Point 1: Improve the quality of incoming materials. End the practice of awarding business on the basis of a price alone. Instead, depend on meaningful measures of quality, along with price... More

Build Trust Into Your Supply Chain

Companies that exercise power over their suppliers get hostility in return. "They also receive much less value from those suppliers – in terms of costs, quality, technology, cycle time, and more – than do firms that develop trust with them."¹ To succeed, you must build trust in any business setting... More

Virtual Integration

Virtual integration, as opposed to traditional vertical "contractor-subcontractor" integration, represents the decomposition of the traditional company. Virtual integration is characterized by culturally different value-added relationships between manufacturers and suppliers. In the new world of virtual integration, no matter who signs the check, all the people are working together for a common cause. Vertical integration performs, virtual integration innovates.

Dealing With Cultural Problems

IT Solutions Are Not a Technology Fix for Corporate Culture Problems. IT solutions may help you break down internal silos and support collaboration between customer service, management and product development. In addition to helping you respond more quickly to changing business demands, better management of the service side will give you a more complete picture of your customers. That, in turn, will help you better serve customers and create long-term loyalty. SCM software is not a technology fix for a corporate culture problem however; you should only look at it if your internal business processes will support it.³

Green Procurement

Many multinational companies have launched comprehensive and innovative environmental programs on their own, not just for themselves but for their suppliers as well, most of whom are SMEs. This initiative, known as "Green Procurement" or "Greening the Supply Chain", means that the large corporations are using their purchasing power to ensure that their suppliers, which could be anywhere in the world, meet certain environmental requirements... More

 Case in Point  Procter & Gamble

P & G reorganized its product supply chain into a superfunctions unit by combining formerly independent functions of purchasing, engineering, and distribution. A product supply manager was created for each division and the functions report to him. These measures reduced flow time and inventories, and increased on-time delivery and quality.

 Case in Point  GE

GE actively draws on the experience of its various suppliers when designing new products. It also works with suppliers to teach them what it know about building winning organizations.

Established in 1995, General Electric (GE) Equity, a business unit within GE Capital, invested nearly $4 billion in 300 businesses by 2000; of those 40% represent opportunities that emerged inside GE; two-thirds of ventures sell products and services to GE. Currently GE Equity invests between $1.2 billion and $1.5 billion annually in ventures.

Value investing – using corporate venture investments to help GE businesses grow – is the main mission of GE Equity. Ideally, each and every of GE Equity's investments adds value to both GE and the start-up. Before investing in a venture, GE Equity determines if a synergetic relationship between the venture and one of more of GE's businesses is possible.

One of the goals of GE Equity is to extend GE's management and operating systems to the portfolio companies. GE Equity also created Community.com as a portal for the companies in which GE Equity has invested so they could come together and interact. Using this web-tool, the companies are able to sell to one another and take advantage of GE's purchasing power... More

Bibliography:

1. "Trusted Partners," Jordan D. Lewis

2. "The Cycle of Leadership," Noel M. Tichy

3. "Say Goodbye To Supply Chain Silos," Mark Brunelli