Download Pat Woods Presentation 4.26.12 - Institute for Supply Management

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.
Kick Off Question
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!!!!!
Copyright © 2011, Supply Chain Education, Inc.
Kick Off Question
What major event happened in the year 2000?
A)
The world as we knew it came to an end.
Copyright © 2011, Supply Chain Education, Inc.
Kick Off Question
What major event happened in the year 2000?
A)
B)
The world as we knew it came to an end.
The San Antonio Spurs beat the Dallas Mavericks
in the NBA Championship.
Copyright © 2011, Supply Chain Education, Inc.
Kick Off Question
What major event happened in the year 2000?
A)
B)
C)
The world as we knew it came to an end.
The San Antonio Spurs beat the Dallas Mavericks
in the NBA Championship.
Bobby Thomas turned 10 years old.
Copyright © 2011, Supply Chain Education, Inc.
Kick Off Question
What major event happened in the year 2000?
A)
B)
C)
D)
The world as we knew it came to an end.
The San Antonio Spurs beat the Dallas Mavericks
in the NBA Championship.
Bobby Thomas turned 10 years old.
This presentation was made at the 85th NAPM
International Conference in New Orleans.
Copyright © 2011, Supply Chain Education, Inc.
Kick Off Question
What major event happened in the year 2000?
A)
B)
C)
D)
The world as we knew it came to an end.
The San Antonio Spurs beat the Dallas Mavericks
in the NBA Championship.
Bobby Thomas turned 10 years old.
This presentation was made at the 85th NAPM
International Conference in New Orleans.
Copyright © 2011, Supply Chain Education, Inc.
The Preferred Customer
The Three Key Objectives
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
Copyright © 2011, Supply Chain Education, Inc.
The Preferred Customer
The Three Key Objectives
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
Copyright © 2011, Supply Chain Education, Inc.
The Preferred Customer
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.
Copyright © 2011, Supply Chain Education, Inc.
The Preferred Customer
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.
Copyright © 2011, Supply Chain Education, Inc.
The Preferred Customer
Isn’t It Like A Marriage?
Copyright © 2011, Supply Chain Education, Inc.
The Preferred Customer
Have You Selected The Right
Partner?
Copyright © 2011, Supply Chain Education, Inc.
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
Copyright © 2011, Supply Chain Education, Inc.
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.
Case Study: From Bitter To Sweet
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?
Copyright © 2011, Supply Chain Education, Inc.
The Preferred Customer
The Underlying Problem
http://www.youtube.com/watch?v=FGfplQ1FUFs
Copyright © 2011, Supply Chain Education, Inc.
The Preferred Customer
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 and
to form the basis of the rating category.
Copyright © 2011, Supply Chain Education, Inc.
Benchmarking
PROCESS
QA
Management
Financial
Delivery
Pricing
PERFORMANCE
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Key Benchmarking Questions
– QA-Quality Assurance
1. 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.
The Preferred Customer
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 and
to form the basis of the rating category.
Copyright © 2011, Supply Chain Education, Inc.
Boilerplate Ts & Cs
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
Force Majeure
Comity
Patents
Copyrights
Restraint Of Trade/ Anti-trust
Assignability
Indemnification
Limitation of Liability
Waiver of Consequential Damages
Reservation of Right
Termination
Warranty
Copyright © 2011, Supply Chain Education, Inc.
The Preferred Customer
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.”
Copyright © 2011, Supply Chain Education, Inc.
The Preferred Customer
PreQualified
Types of Supplier
Categories
Approved
Certifiable
Partners
Preferred
Certified
Copyright © 2011, Supply Chain Education, Inc.
The Preferred Customer
The Three Key Objectives
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
Copyright © 2011, Supply Chain Education, Inc.
The Preferred Customer
What are the benefits of
establishing and maintaining
good supplier relationships?
Copyright © 2011, Supply Chain Education, Inc.
The Preferred Customer
BIC
Suppliers
Reduced
Risk
Six Optimization
Benefits
Pursue
Value-Add
Improved
SCM
Leverage
Lower
TCO
Copyright © 2011, Supply Chain Education, Inc.
The Preferred Customer
Conduct supplier
surveys
Provide suppliers
training
Encourage
Confidentiality
Enhance
two-way
communication
Pay
suppliers
on time
Periodic top management
meetings
Ensure suppliers
understand your
customer functions
Copyright © 2011, Supply Chain Education, Inc.
Treat suppliers equally
Three Types of Supplier Relationships
Transactional
Low value, price type purchases
Collaborative
Longer commitment, blanket order
Strategic Alliance
Long Term agreement, VMI/VOI
Copyright © 2011, Supply Chain Education, Inc.
The Preferred Customer
What is Supply Base
Innovation?
Copyright © 2011, Supply Chain Education, Inc.
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.
The Preferred Customer
The Three Key Objectives
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
Copyright © 2011, Supply Chain Education, Inc.
The Preferred Customer
Have you ever
heard of Ignatio
Lopez?
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.
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.
Copyright © 2011, Supply Chain Education, Inc.
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.
Copyright © 2011, Supply Chain Education, Inc.
The Top Ten Reasons To Become
A Preferred Customer
8. As your relationship continues and grows, you
will eliminate or minimize the costs of trying to
locate replacement sources of supply.
Copyright © 2011, Supply Chain Education, Inc.
The Top Ten Reasons To Become
A Preferred Customer
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.
Copyright © 2011, Supply Chain Education, Inc.
The Top Ten Reasons To Become
A Preferred Customer
6. Your partnered supplier(s) will be willing to
share new ideas & new opportunities with its
key customer – you (innovation).
Copyright © 2011, Supply Chain Education, Inc.
The Top Ten Reasons To Become
A Preferred Customer
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.
Copyright © 2011, Supply Chain Education, Inc.
The Top Ten Reasons To Become
A Preferred Customer
4. With contract clauses such as: “50/50” share,
your supplier now has incentive & will/should
make improvements.
Copyright © 2011, Supply Chain Education, Inc.
The Top Ten Reasons To Become
A Preferred Customer
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.
Copyright © 2011, Supply Chain Education, Inc.
The Top Ten Reasons To Become
A Preferred Customer
2. Since their supplier relationships are positive,
this should also lead to a lower stress level
with happier supplier employees.
Copyright © 2011, Supply Chain Education, Inc.
The Top Ten Reasons To Become
A Preferred Customer
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!!!!
Copyright © 2011, Supply Chain Education, Inc.
The Preferred Customer
Any Final
Questions?
Copyright
Copyright ©
© 2011,
2011, Supply
Supply Chain
Chain Education,
Education, Inc.
Inc.
Meet the Presenter:
Patrick S. Woods, CPSM,CPSD,C.P.M.,CPIM
Phone: 972-333-9376, E-mail: [email protected]
Web: www.supplychaineducation.com
Patrick (Pat) S. Woods is President of Supply Chain Education, founded ten
years ago, to provide professional development in supply chain and materials
management. He has spent the past 15 years in the employ of such corporations
as Colt Industries, Intergraph, Emerson Electric and EDS. He has held key
positions from materials expeditor to buyer/planner to supply chain manager to
training 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.
Copyright © 2011, Supply Chain Education, Inc.