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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," writes Noel
M. Tichy2
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...
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Areas Targeted by TQM in Japan
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.
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
Kaizen
Mindset
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...
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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.
3 Strategies of Market Leaders
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...
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