Thursday, January 29, 2009

Suppliers, Part Three: How to Best Leverage Them

This is my third post on suppliers. As a supplier as well as the leader of a corporation that spends millions of dollars annually with our suppliers, I feel strongly about the value of a good, honest supplier to its client.

Too often, corporations are one-dimensional with suppliers: bid them out, get the lowest priced one and move on.

This is the approach that GM perfected and it cost them. Corners were cut, creativity and passion disappeared (GM didn't want to pay for passion, creativity or loyalty). It's not fair to single out GM, there are good people there and there is hope that they will recover. But they won't without a different approach toward suppliers.

I've thought it would be interesting if we applied the Golden Rule to this. If you were treated by your boss the way many corporations treat suppliers, how would you feel and perform? If your boss said, "We're going to interview a few people that want your job and to be fair we'll also include you in the competition," would you be worried or would you say, "Great idea"? I think most of us would be at least concerned--after all the competitors may make performance promises that sound good but aren't realistic, they may say whatever it takes to win whether they can pull it off or not, etc.

Then factor in all the waste in doing the competition--hours upon hours of preparation, hours of going through the process for everyone and the emotional drain.

To be clear, all suppliers are not equal. The mediocre supplier that does only what is told should be bid out. The bad supplier should be fired. But if you have a dedicated, valuable supplier that goes beyond, why not first work with them to do what my previous blogs have recommended and utilize their insights and build a better, even more valuable relationship?

I say, why not give it a try? If it doesn't work, you can always bid them out next year.

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