Skillfully Managing Supplier Relationships
PurchTips - Edition #152 May 20, 2008
By Charles Dominick, SPSM
What Nuances Does Relationship Management Have?
One of the keys to maximizing the positive impact of a supplier relationship is "getting your own house in order." In other words, if your own systems, processes, and people are not up to par, you can adversely affect the supplier's performance.
Michael Massetti, the Vice President of Global Procurement & Quality for Tekelec, agrees, using a golf analogy: "If you're a 95 or 100 golfer and you get the latest, greatest Nike driver, it's certainly unlikely that your game is going to improve. I look at the relationship you have with suppliers similarly. If you're doing work with suppliers and you don't have processes that are consistent, that are sustainable, that execute the same way over and over again, it's unlikely that to ask them to perform very well in an uncertain environment is going to lead to very good results."
Massetti knows first-hand about looking internally to solve supplier relationship problems. Tekelec recently had some concerns about a supplier's delivery performance. Naturally, the tendency of internal customers was to blame the supplier. However, "when we started looking at the root cause of the problems, we realized that there were things on our side that were contributing to that lack of performance," he says.
"When we really started unpeeling the proverbial onion, we found out that there were some issues with our own forecasting process and how we were managing inventory," Massetti shares. But collaborating with the supplier and making changes internally "allowed us to improve the overall delivery performance remarkably."
Not all suppliers are equally important to your organization, so you shouldn't take the same approach to managing supplier relationships with each of them. For example, you wouldn't redesign a complex internal process to improve a relationship with a low-spend supplier of non-critical items. Massetti bases his team's approach to relationships on Tekelec's supplier stratification scheme that includes three tiers: Partners, Suppliers, and Vendors.
Tekelec's Partner relationships involve executive engagement, dedicated resources on both sides, scorecards to evaluate performance at least quarterly, and time and effort spent to develop the relationship.
(Keep reading for a FREE Offer)
Spotlight On Professional Development Opportunities
Are you tired of not getting enough opportunities, respect, and money out of your purchasing career? Well, guess what? Nothing will change unless you take action towards becoming a world-class purchasing professional.
Earning your SPSM® Certification by completing the Senior Professional in Supply Management® Program is the action to take if you want to bring the most modern purchasing practices into your organization and achieve your career potential. And if you sign up for the Senior Professional in Supply Management® Program on or before May 31, 2008, you also get these and other bonuses valued at over $700:
- FREE $30 gift certificate to Amazon.com!
- FREE CD-ROM with printer-friendly versions of the class materials!
- FREE Purchasing Performance Measurement spreadsheet template!
- FREE audio CD about purchasing job security!
To learn how to earn your SPSM® Certification and get these valuable bonuses, visit:
The Latest Purchasing News!
- Do you supervise a purchasing team? If so, learn about a FREE service that may be just for you at:www.NextLevelPurchasing.com/benchmark
- Considering a career move? Browse over 90 jobs preferring candidates with the SPSM® Certification at www.NextLevelPurchasing.com/jobs
Want to learn more about todayís topic? Then check out my podcast interview with Michael Massetti! Podcasts are audio files that you can listen to on your PC, download to your iPod/MP3 player, or burn to CD.
Itís absolutely FREE to download the audio. So why not add to your collection of great purchasing education material?