Copyright © 2011, Supply Chain Education, Inc. Have You Hugged Your Supplier Today? The Benefits as a PREFERRED CUSTOMER Presented to ISM-San Antonio,

Copyright © 2011, Supply Chain Education, Inc.

Have You Hugged Your Supplier Today?

The Benefits as a PREFERRED CUSTOMER

Presented to ISM-San Antonio, April 26, 2012

Have You Hugged Your Supplier Today?

The Benefits as a PREFERRED CUSTOMER

Presented to ISM-San Antonio, April 26, 2012


What major event happened in the year 2000? The first person to run up to me and give me the correct answer will win a:

Diamond Clip!!!!!

Kick Off Question


What major event happened in the year 2000?

A) The world as we knew it came to an end.

Kick Off Question




B) The San Antonio Spurs beat the Dallas Mavericks

in the NBA Championship.

Kick Off Question






C) Bobby Thomas turned 10 years old.

Kick Off Question







D) This presentation was made at the 85th NAPM

International Conference in New Orleans.

Kick Off Question







D) This presentation was made at the 85th NAPM

International Conference in New Orleans.

Kick Off Question


OBJ1: Understand The True Meaning Of A: PREFERRED CUSTOMER

OBJ2: Describe The Benefits Of Giving, In A Give-And-Take Relationship

OBJ3: Ascertain The Damage From A Take Only Philosophy

The Three Key Objectives The Three Key Objectives

The Preferred Customer








Strategic partnering is a relationship within the supply chain based on trust, shared risk and rewards aimed toward achieving a competitive advantage.

What is a Partnership?



Strategic partnering is a relationship within the supply chain based on trust, shared risk and rewards aimed toward achieving a competitive advantage.

What is a Partnership?



Isn’t It Like A Marriage?



Have You Selected The Right Partner?



The Ten-Tale Tale Signs Of A

Poor Supplier 1. Cost Increase Passers Vs. Cost Cutters

2. Order Terms And Conditions Are Ignored

3. Minimal To Zero Sales Visits

4. Procurement Is Bypassed In Favor Of Other

Departments

5. Lack Of Management Support



Poor Supplier 6. An Unresponsive Customer Service Staff

7. Customer Treated According To Sales $

8. Emphasis On “Use As Is”

9. No Innovation

10. Their QA Department Is Your QA Department



Poor Supplier 1. C ost Increase Passers Vs. Cost Cutters

2. O rder Terms And Conditions Are Ignored

3. M inimal To Zero Sales Visits

4. P rocurement Is Bypassed In Favor Of Other Departments

5. L ack Of Management Support

6. A n Unresponsive Customer Service Staff

7. C ustomer Treated According To Sales $

8. E mphasis On “Use As Is”

9. N o Innovation

10.T heir QA dept. Is Your QA dept.


You are the Supply Manager for Sugar Daddy Candies w/ sales of $5B to all the major candy stores in the world. You are primarily known for your chocolate product lines: including the X, Y, Z exclusives:

X-Cessive - Oprah Winfrey Rich Nougat Y-Watchit - Jerry Springer Nut Cluster Z-Rotalnt - Brittney Spears Imitation Pieces

For the last 100 years, your sole source supplier: Roturteethout has had a 100% on time delivery record. Over the last year, it has dropped to 50%. Does this mean that you are no longer a PREFERRED CUSTOMER?

You are the Supply Manager for Sugar Daddy Candies w/ sales of $5B to all the major candy stores in the world. You are primarily known for your chocolate product lines: including the X, Y, Z exclusives:

X-Cessive - Oprah Winfrey Rich Nougat Y-Watchit - Jerry Springer Nut Cluster Z-Rotalnt - Brittney Spears Imitation Pieces

For the last 100 years, your sole source supplier: Roturteethout has had a 100% on time delivery record. Over the last year, it has dropped to 50%. Does this mean that you are no longer a PREFERRED CUSTOMER?

Case Study: From Bitter To Sweet


The Underlying Problem

http://www.youtube.com/watch?v=FGfplQ1FUFs



A Key Preferred Customer Tool:

Benchmarking

To develop a best-in-class standard by which to measure your supplier(s) and to quantify and weight each standard

according the importance to your firm andto form the basis of the rating category.





PERFORMANCE

PROCESS

Benchmarking

Management

Delivery

QA

Financial

Pricing


Key Benchmarking Questions – QA-Quality

Assurance1. Does your supplier have a formal system in place?

2. Is SPC part of their system?

3. Is there evidence of continuous improvement?

4. Does the supplier set quality objectives with metrics?


Key Benchmarking Questions – Management

1. Does your supplier have a formal business plan?

2. What is your supplier’s Mission Statement?

3. Does the supplier’s management possess good skills?


Key Benchmarking Questions – Financial

1. Does the supplier conduct annual financial audits?

2. Is your supplier willing to share key financial data?


Key Benchmarking Questions – Delivery

1. Is your supplier aware of your delivery goals?

2. Does your supplier support delivery changes?

3. Are acknowledgements timely and accurate?

4. Are there joint plans for lead-time reduction?


Key Benchmarking Questions – Pricing

1. Can your supplier reduce/control its operating costs?

2. Are processes in place to manage their suppliers?

3. Do they possess knowledge of industry trends?


A Key Preferred Customer Tool:

Contracts With Teeth







Boilerplate Ts & Cs 1. Force Majeure

2. Comity

3. Patents

4. Copyrights

5. Restraint Of Trade/ Anti-trust

6. Assignability

7. Indemnification

8. Limitation of Liability

9. Waiver of Consequential Damages

10. Reservation of Right

11. Termination

12. Warranty


Specific Clauses - Cost Reduction Cost Reduction Goals

“Supplier agrees to provide customer with total annual cost reductions of ___ % under this agreement. Cost reductions will be measured on the total value of products purchased under the agreement on an annual basis. If supplier does not provide the agreed cost reduction percentage in a given year, supplier will rebate the amount of the shortfall to the customer within 45 days after the applicable year. The parties will share cost reductions in excess of ___% equally, as described below.”



Pre-Qualified

Pre-Qualified

ApprovedApproved

CertifiableCertifiable CertifiedCertified

PartnersPartnersPartnersPartners

PreferredPreferred

Types of Supplier Categories









What are the benefits of establishing and maintaining good supplier relationships?



BICSuppliers

BICSuppliers

ImprovedSCM

ImprovedSCM

LeverageLeverageLowerTCO

LowerTCO

ReducedRisk

ReducedRisk

PursueValue-Add

PursueValue-Add

Six OptimizationBenefits



Periodic top managementmeetings

Periodic top managementmeetings

Conduct suppliersurveys

Conduct suppliersurveys

Ensure suppliersunderstand your

customer functions

Ensure suppliersunderstand your

customer functionsTreat suppliers equallyTreat suppliers equally

Provide supplierstraining

Provide supplierstraining

EncourageConfidentiality

EncourageConfidentiality

Pay Pay suppliers suppliers on timeon time

Pay Pay suppliers suppliers on timeon time

Enhance Enhance two-way two-way

communicationcommunication

Enhance Enhance two-way two-way

communicationcommunication



Three Types of Supplier RelationshipsThree Types of Supplier Relationships

Transactional

Low value, price type purchases

Collaborative

Strategic Alliance

Longer commitment, blanket order

Long Term agreement, VMI/VOI


What is Supply Base

Innovation?



INNOVATION: What do you think about:

1. Ford = Fix or repair daily 2. Ford = Found on the road dead 3. Ford = A Preferred Customer

http://info.detnews.com/video/index.cfm?id=1189








Have you ever

heard of Ignatio Lopez?



Six Negative Relationship Factors

1. Demanding more than the relationship should cover.

2. Always berating your supplier(s).

3. Micro-managing the customer-supplier relationship.


Six Negative Relationship Factors

4. Arguing w/ every criticism/feedback of you as customer.

5. Giving “lip service only” to the contract.

6. Entertaining “Sharp Practices” with your supplier.


10. Your supplier will promote your company to the business world as one who displays both fairness and high ethical principles.

The Top Ten Reasons To Become A Preferred Customer


10. Your supplier will promote your company to the business world as one who displays both fairness and high ethical principles.

9. In our changing business marketplace, if your supplier should also become your customer, then you have strengthened the relationship for future growth.



8. As your relationship continues and grows, you will eliminate or minimize the costs of trying to locate replacement sources of supply.



8. As your relationship continues and grows, you will eliminate or minimize the costs of trying to locate replacement sources of supply.

7. By saving the time in trying to find replacement sources of supply, you can now focus on other strategic projects.



6. Your partnered supplier(s) will be willing to share new ideas & new opportunities with its key customer – you (innovation).



6. Your partnered supplier(s) will be willing to share new ideas & new opportunities with its key customer – you (innovation).

5. By utilizing good buyer-supplier relationships, your company will have an edge over the competition who may still be practicing the “Lopez” approach.



4. With contract clauses such as: “50/50” share, your supplier now has incentive & will/should make improvements.



4. With contract clauses such as: “50/50” share, your supplier now has incentive & will/should make improvements.

3. Since your relationships are positive, this could lead to a lower stress level with happier SM employees.



2. Since their supplier relationships are positive, this should also lead to a lower stress level with happier supplier employees.



2. Since their supplier relationships are positive, this should also lead to a lower stress level with happier supplier employees.

1. As your supplier works to assist you, its: PREFERRED CUSTOMER, in reducing the costs of purchases, this goes straight to the: BOTTOM LINE!!!!



Any Final

Questions?




Meet the Presenter:

Patrick S. Woods, CPSM,CPSD,C.P.M.,CPIM Phone: 972-333-9376, E-mail: [email protected]

Web: www.supplychaineducation.comPatrick (Pat) S. Woods is President of Supply Chain Education, founded ten years ago, to provide professional development in supply chain and materialsmanagement. He has spent the past 15 years in the employ of such corporationsas Colt Industries, Intergraph, Emerson Electric and EDS. He has held key positions from materials expeditor to buyer/planner to supply chain manager totraining director.

Pat is a CPSM , CPSD and C.P.M. through ISM and is Certified in Production and Inventory Management (CPIM) though APICS -The Association for Operations Management. In addition to his own clients, Pat is a national trainer for both and travels the U.S. presenting credentialing programs and workshops for the membership. Pat was the 2009-2010 President of ISM-Dallas.

Documents

Copyright © 2011, Supply Chain Education, Inc. Have You Hugged Your Supplier Today? The Benefits as a PREFERRED CUSTOMER Presented to ISM-San Antonio,