Posted by Anne Feith and Pamela J. Gordon

Corporate managers tend to think they already are using their suppliers’ best capabilities, and that they are managing suppliers optimally. But by talking candidly with clients’ suppliers, and having them evaluate their customers anonymously, we’ve found hidden pockets of costs and superfluous steps that can be eliminated for everyone.

A client currently using this “cool trick” to hone its supply-chain and new-product-introduction (NPI) processes is discovering significant cost reductions by leveraging key suppliers’ procurement capabilities. You see, the suppliers we interviewed also serve our client’s peers. Our client hadn’t realized before the study how much insight their suppliers have accumulated about high-quality and low-cost sources around the world, and that they have bulk-buy capability (across customers) that can save our client millions of dollars.

In this month’s issue of Manufacturing Business Technology is an article we wrote on nimble NPI practices. Not enough companies rigorously investigate how their suppliers can help them accelerate NPI. The supplier interviews illuminate pre-design, pre-production collaboration that streamlines and removes processes—saving time and money.

All cool tricks get their start somewhere. Several years ago, Cisco CEO John Chambers said to VP Advanced Sourcing Manufacturing Steve Darendinger something like this: I want Cisco to be as good a customer to our suppliers as we want our customers to be to us. What resulted were semi-annual interviews by TFI analysts with selected Cisco suppliers to report anonymous and detailed input to Cisco. Steve said, “Cisco values its relationships with suppliers to the extent that we had Technology Forecasters–an objective third-party–measure our suppliers’ levels of satisfaction with Cisco as a customer, in key aspects of the relationship. This way, we are able to continually improve our supplier relationships as ecosystem partners, enabling us to provide the best solutions for our customers and stakeholders.”

When Cisco proudly presented the program (we call it “Supplier Relationship Excellence”) to some of its customers, one signed onto the program. Since then, we’ve conducted hundreds of in-depth interviews with our clients’ suppliers around the world.

One reason this process-improvement trick is cool is that not many companies are doing it yet. It takes an executive who is so goal-oriented and egoless that “barriers” such as the four walls of his/her facilities hardly matter. One executive told us: “I’ve got to tighten supply-chain processes to reduce costs for my company, and I want to hear the voice of our suppliers—as channeled through an objective party.”

We’d like to hear from you: Would you open yourself up to anonymous input from your suppliers, and infuse those candid insights into process improvements for supply chain and NPI?

Posted by Pamela J. Gordon, September 12th, 2008

Filed to Lean Practices, Outsourcing

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