We have been saying for quite some time that suppliers won’t give their best stuff to their worst customers, and here’s another voice chiming in with the same message. Smartblog on Food and Beverage with supported research from SCM World indicates that innovative ideas and marketing only come when there is a targeted audience that will respond/engage. It is difficult to harvest creativity for customers that won’t notice or care — which is another way of saying, “listen to your suppliers because they are listening to you.” SCM World also states that collaborative relationships between brands/businesses for great ROI are only successful when there is the right market. Their tips for successful business relationships range from sharing strategic information to measuring and rewarding success.
“An opportunity to hit the accelerator on U.S. auto manufacturing growth” is how Energy Secretary Ernest Moniz characterized the Advanced Technology Vehicles Manufacturing Loan Program (ATVM) and the $16 billion in low-interest financing that is available to support efficient-vehicle programs. While auto suppliers have always been eligible to participate since Congress created the ATVM in 2007, none have secured funding to date. Well, it’s about time the feds recognized that innovation comes from the supply chain as well as OEMs.
Moniz announced in a speech last week that the program is being overhauled to make it easier to fund production of technologies such as lightweight materials, efficient engines and low-friction tires. The changes also include legal clarification to show that suppliers are eligible for the program, a promise to respond more quickly to applicants and the creation of a new on-line application portal.
Roland Hwang, director of the transportation program at the Natural Resources Defense Council, weighed in and said focusing on suppliers is appropriate because automakers are increasingly depending on them to help meet new fuel economy standards, which can strain the suppliers’ finances.
Ford Motor Company, Nissan, Tesla Motors and Fisker Automotive all have participated in the loan program. Auto suppliers, it’s your turn.
For a number of years we’ve been watching the trend of supply managers to think more strategically, for instance, looking for ways that relationships with suppliers can bring innovations that could increase sales instead of simply reducing costs. The Hackett Group recently released a research alert that confirms that trend. Read it here.
The report is based on an annual survey of procurement leaders, and this year’s survey found supply managers looking past cutting or containing costs to more strategic priorities as expanding the scope of procurement’s influence on spend and tapping suppliers for innovations.
The Hackett Group Global Managing Director and Procurement Advisory Practice Leader Chris Sawchuk said, “We believe many procurement organizations have reached the upper limit of cost reductions possible in categories they are actively sourcing today. So they’re looking for ways to reinvent their value proposition. A key part of this is expanding their influence, and taking a life-cycle approach to category management. This requires working more effectively with spend owners, executives, requisitioners, suppliers, and other stakeholders. It also calls for skills that are outside procurement’s traditional areas of expertise.”
The big idea from this research is that long term success for supply managers comes when they think like a CEO. However, as we all know, if you are stuck in the swamp it’s darn hard to see what it looks like from the mountaintop. To get from here to there it may take investments to raise your skills and those of the team around you. It may take a continuous process improvement approach to the work your department does, and it may take investments in technology to reduce the transaction costs of non-strategic purchases. In short, you may have to start thinking like a CEO of your team before you can align with the CEO of your organization.
Posted in Professional Development, Staff Skills, Supplier Relations, Transformation
Tagged cost containment, global business, procurement, purchasing, sourcing, Supplier Relations, supply chain, supply management
We couldn’t agree more with Philip Hicks, procurement manager at Northumbrian Water, who said the key to his company’s supply chain sustainability is getting out and meeting with its top suppliers. As he points out, companies expect their suppliers to help them achieve their sustainability goals, and it’s only through personal engagement that suppliers will come to understand the role they play.
A Sedexglobal report, however, encourages companies to go a step further into the supply chain and meet with as many suppliers as possible, whether they’re Tier 1, 2 or 3. It points out that the “greatest and most critical sustainability risks are found deeper down the supply chain.” Unfortunately, only a third of companies are actively seeking transparency below Tier 1 in their supply chain.
How deep into the supply chain are you managing your supplier relationships? Are you going far enough?
Early in my career I bought parts to build typewriters — which happened to be important pieces of equipment for purchasing departments everywhere because manually typing purchase orders was one of our important functions. The typewriter and that job became obsolete together.
I was reminded of that by an article in Forbes about how “We Need to Change How We Think About Talent.” It points out how the skills needed to succeed are always changing. Technology is an important part of that. We don’t need typewriters and clerks to manage a supply chain any more, we need sophisticated technology and skilled professionals. And as supply management is more tightly integrated with overall corporate strategies, the breadth of those skills is constantly increasing. It’s uncomfortable for some of us, but we really ought to embrace it. The fact is that software is doing to cubicle work what automation did to the factory floor — replacing people who did repetitive tasks.
The only way to stay on the top of your profession is to become a continual learner. World-class supply organizations have recognized that, but you don’t have to be part of a global purchasing operation to find opportunities for learning. I’ll put in my pitch for ISM educational resources, because they are very accessible to any professional and can lead to credible professional credentials. However, a number of degree-granting universities are also very active in online programs, if that’s your goal.