|
|
|
|
| |
The new way to work with subcontractors and suppliers recognizes them to be valuable partners, capable of making or breaking your company’s products and services. To understand this point, you have to see your company as only one link in the long chain of organizations that lead to customer satisfaction. |
|
| |
Your subcontractors and suppliers are the other links, and just like any chain, it is only as strong as its weakest link. The old-style competitive bidding processes can weaken subcontractors and suppliers to such a degree, that they may loose their ability to improve and innovate, or even to maintain their operations. |
|
| |
The results are unreliable supply and outdated quality and technology – none of which will cut it in today’s cutthroat competitive marketplace. By squeezing its suppliers and subcontractors, a company may be able to offer its products and services to customers at a lower price. But this leads to yet another set of problems we have already examined in section three. If your company is going to survive and succeed in the new millennium, it is going to have to compete in terms of product and service quality and diversity – not simplistically on low sticker price alone. |
|
| |
One of the things that must be done to make this happen is the complete overhaul of customer/supplier relations. Competitive bidding processes that award small component parts contracts to the lowest bidder for short periods of time are now obsolete. All this system ever accomplished was the establishment of arm’s length relations characterized by mistrust and secrecy. The sum total of the relationship came down to a few numbers describing delivery schedules, defect rates, volumes, and unit prices. (A Story about Defective Parts Allowances) In this old-style supplier relationship, nothing else mattered. |
|
| |
This is in stark contrast to the new way. In this system, contracts are awarded to companies that can demonstrate their ability to add value and improve quality. To this end, they must be able to work collaboratively to solve problems that straddle both companies. By working together for mutual benefit, each company supports the other in their mutual quest to innovate and improve. |
|
| |
Joint problem solving teams made up of members from each company, work together to produce these innovations and improvements. And when gains are achieved, the benefits are shared fairly between all participants. When problems do arise, there is no hesitation to ask for help. In this system, companies do not take advantage of one another. Instead, they work together for mutual benefit. |
|
| |
This requires a long-term view and of course longer contract periods as well. This serves to assure subcontractors and suppliers that their efforts to improve and innovate will pay-off. As well, subcontractors and suppliers are given larger projects and parts to produce, so that they can develop a more detailed understanding of how they add value, enabling them to add yet more value. (The Role of a "Shusa") |
|
| |
Think of it like this: The old way lead companies to grab for larger pieces of the pie, while doling out smaller pieces to their subcontractors and suppliers. In the new way, companies work together to make larger pies, so that everyone gets a bigger piece. (The Regional Advantage of Silicon Valley) |
|
