Supplier Relationship
Supplier and Partnering Processes
For many businesses, goods and services provided by suppliers or partners account for a significant portion of the cost and value of the final product. Suppliers include not only companies that provide materials and components, but also distributors, transportation companies, and information, healthcare, and education providers. Key suppliers might provide unique design, technology, integration, or marketing capabilities that are not available within the business, and therefore can be critical to achieving such strategic objectives as lower costs, faster time-to-market, and improved quality. Organizational partners might include educational institutions that collaborate on research and training. (Conversely, a company might be viewed as a partner for an educational institution.) Increasingly, suppliers are viewed as partners with customers, because there usually is a co-dependent relationship. A powerful example of supplier partnerships is the response that occurred when a fire destroyed the main source of a crucial $5 brake valve for Toyota.1 Without it, Toyota had to shut down its 20 plants in Japan. Within hours of the disaster, other suppliers began taking blueprints, improvising tooling systems, and setting up makeshift production lines. Within days, the 36 suppliers, aided by more than 150 other subcontractors, had almost 50 production lines making small batches of the valve. Even a sewing-machine company that had never made car parts spent 500 person-hours refitting a milling machine to make just 40 valves a day. Toyota promised the suppliers a bonus of about $100 million “as a token of our appreciation.” Strong customer/supplier relationships are based on three guiding principles:
1. Recognizing the strategic importance of suppliers in accomplishing business objectives, particularly minimizing the total cost of ownership,
2. Developing win-win relationships through long-term partnerships rather than as
For many businesses, goods and services provided by suppliers or partners account for a significant portion of the cost and value of the final product. Suppliers include not only companies that provide materials and components, but also distributors, transportation companies, and information, healthcare, and education providers. Key suppliers might provide unique design, technology, integration, or marketing capabilities that are not available within the business, and therefore can be critical to achieving such strategic objectives as lower costs, faster time-to-market, and improved quality. Organizational partners might include educational institutions that collaborate on research and training. (Conversely, a company might be viewed as a partner for an educational institution.) Increasingly, suppliers are viewed as partners with customers, because there usually is a co-dependent relationship. A powerful example of supplier partnerships is the response that occurred when a fire destroyed the main source of a crucial $5 brake valve for Toyota.1 Without it, Toyota had to shut down its 20 plants in Japan. Within hours of the disaster, other suppliers began taking blueprints, improvising tooling systems, and setting up makeshift production lines. Within days, the 36 suppliers, aided by more than 150 other subcontractors, had almost 50 production lines making small batches of the valve. Even a sewing-machine company that had never made car parts spent 500 person-hours refitting a milling machine to make just 40 valves a day. Toyota promised the suppliers a bonus of about $100 million “as a token of our appreciation.” Strong customer/supplier relationships are based on three guiding principles:
1. Recognizing the strategic importance of suppliers in accomplishing business objectives, particularly minimizing the total cost of ownership,
2. Developing win-win relationships through long-term partnerships rather than as