copyright © 2011, supply chain education, inc. have you hugged your supplier today? the benefits as...
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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
Copyright © 2011, Supply Chain Education, Inc.
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
Copyright © 2011, Supply Chain Education, Inc.
What major event happened in the year 2000?
A) The world as we knew it came to an end.
Kick Off Question
Copyright © 2011, Supply Chain Education, Inc.
What major event happened in the year 2000?
A) The world as we knew it came to an end.
B) The San Antonio Spurs beat the Dallas Mavericks
in the NBA Championship.
Kick Off Question
Copyright © 2011, Supply Chain Education, Inc.
What major event happened in the year 2000?
A) The world as we knew it came to an end.
B) The San Antonio Spurs beat the Dallas Mavericks
in the NBA Championship.
C) Bobby Thomas turned 10 years old.
Kick Off Question
Copyright © 2011, Supply Chain Education, Inc.
What major event happened in the year 2000?
A) The world as we knew it came to an end.
B) The San Antonio Spurs beat the Dallas Mavericks
in the NBA Championship.
C) Bobby Thomas turned 10 years old.
D) This presentation was made at the 85th NAPM
International Conference in New Orleans.
Kick Off Question
Copyright © 2011, Supply Chain Education, Inc.
What major event happened in the year 2000?
A) The world as we knew it came to an end.
B) The San Antonio Spurs beat the Dallas Mavericks
in the NBA Championship.
C) Bobby Thomas turned 10 years old.
D) This presentation was made at the 85th NAPM
International Conference in New Orleans.
Kick Off Question
Copyright © 2011, Supply Chain Education, Inc.
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
Copyright © 2011, Supply Chain Education, Inc.
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
Copyright © 2011, Supply Chain Education, Inc.
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?
The Preferred Customer
Copyright © 2011, Supply Chain Education, Inc.
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?
The Preferred Customer
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Isn’t It Like A Marriage?
The Preferred Customer
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Have You Selected The Right Partner?
The Preferred Customer
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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
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The Ten-Tale Tale Signs Of A
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
Copyright © 2011, Supply Chain Education, Inc.
The Ten-Tale Tale Signs Of A
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.
Copyright © 2011, Supply Chain Education, Inc.
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
Copyright © 2011, Supply Chain Education, Inc.
The Underlying Problem
http://www.youtube.com/watch?v=FGfplQ1FUFs
The Preferred Customer
Copyright © 2011, Supply Chain Education, Inc.
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.
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.
The Preferred Customer
Copyright © 2011, Supply Chain Education, Inc.
PERFORMANCE
PROCESS
Benchmarking
Management
Delivery
QA
Financial
Pricing
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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?
Copyright © 2011, Supply Chain Education, Inc.
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?
Copyright © 2011, Supply Chain Education, Inc.
Key Benchmarking Questions – Financial
1. Does the supplier conduct annual financial audits?
2. Is your supplier willing to share key financial data?
Copyright © 2011, Supply Chain Education, Inc.
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?
Copyright © 2011, Supply Chain Education, Inc.
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?
Copyright © 2011, Supply Chain Education, Inc.
A Key Preferred Customer Tool:
Contracts With Teeth
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.
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.
The Preferred Customer
Copyright © 2011, Supply Chain Education, Inc.
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
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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.”
The Preferred Customer
Copyright © 2011, Supply Chain Education, Inc.
Pre-Qualified
Pre-Qualified
ApprovedApproved
CertifiableCertifiable CertifiedCertified
PartnersPartnersPartnersPartners
PreferredPreferred
Types of Supplier Categories
The Preferred Customer
Copyright © 2011, Supply Chain Education, Inc.
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
Copyright © 2011, Supply Chain Education, Inc.
What are the benefits of establishing and maintaining good supplier relationships?
The Preferred Customer
Copyright © 2011, Supply Chain Education, Inc.
BICSuppliers
BICSuppliers
ImprovedSCM
ImprovedSCM
LeverageLeverageLowerTCO
LowerTCO
ReducedRisk
ReducedRisk
PursueValue-Add
PursueValue-Add
Six OptimizationBenefits
The Preferred Customer
Copyright © 2011, Supply Chain Education, Inc.
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
The Preferred Customer
Copyright © 2011, Supply Chain Education, Inc.
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
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What is Supply Base
Innovation?
The Preferred Customer
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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
Copyright © 2011, Supply Chain Education, Inc.
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
Copyright © 2011, Supply Chain Education, Inc.
Have you ever
heard of Ignatio Lopez?
The Preferred Customer
Copyright © 2011, Supply Chain Education, Inc.
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.
Copyright © 2011, Supply Chain Education, Inc.
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.
Copyright © 2011, Supply Chain Education, Inc.
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
Copyright © 2011, Supply Chain Education, Inc.
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.
The Top Ten Reasons To Become A Preferred Customer
Copyright © 2011, Supply Chain Education, Inc.
8. As your relationship continues and grows, you will eliminate or minimize the costs of trying to locate replacement sources of supply.
The Top Ten Reasons To Become A Preferred Customer
Copyright © 2011, Supply Chain Education, Inc.
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.
The Top Ten Reasons To Become A Preferred Customer
Copyright © 2011, Supply Chain Education, Inc.
6. Your partnered supplier(s) will be willing to share new ideas & new opportunities with its key customer – you (innovation).
The Top Ten Reasons To Become A Preferred Customer
Copyright © 2011, Supply Chain Education, Inc.
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.
The Top Ten Reasons To Become A Preferred Customer
Copyright © 2011, Supply Chain Education, Inc.
4. With contract clauses such as: “50/50” share, your supplier now has incentive & will/should make improvements.
The Top Ten Reasons To Become A Preferred Customer
Copyright © 2011, Supply Chain Education, Inc.
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.
The Top Ten Reasons To Become A Preferred Customer
Copyright © 2011, Supply Chain Education, Inc.
2. Since their supplier relationships are positive, this should also lead to a lower stress level with happier supplier employees.
The Top Ten Reasons To Become A Preferred Customer
Copyright © 2011, Supply Chain Education, Inc.
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!!!!
The Top Ten Reasons To Become A Preferred Customer
Copyright © 2011, Supply Chain Education, Inc.
Any Final
Questions?
Copyright © 2011, Supply Chain Education, Inc.
The Preferred Customer
Copyright © 2011, Supply Chain Education, Inc.
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.