A Hidden Resource for Great Ideas — Your Suppliers

In pursuing cost-reduction initiatives, senior management often looks to goods and services as an opportune area for cost reductions and bottom-line improvement. Reducing supplier costs has been enabled by sourcing technology. Firms who have wrung much of the cost reduction opportunities through sourcing initiatives can turn to supplier performance management as an effective way to uncover even more opportunities for improved quality, efficiency and cost. But how often do customer firms get beyond using the supply base as a piggybank and think of them as a source of big ideas for their own competitive and bottom-line improvements?

Typically, firms hold "supplier days" to recognize strategic and important suppliers who have contributed to their success. Sometimes they may plan price negotiations during a supplier day. How about a supplier day where the customer just listens to suppliers? I was recently involved in organizing such an event. Key suppliers were invited to a facilitated day of customer listening. No customer defensiveness or refuting of supplier criticism or complaints. No review of supplier scorecards. No discussion of supplier-caused problems for the customer. Only listening to the suppliers.

Why, you may ask, would a customer firm go to all that trouble and ask suppliers to do so as well? What's in it for the supplier? And what's in it for the customer? The answer: ideas to enable to the customer to kick it up a notch, to reduce its costs, to become more competitive in the marketplace. The customer's improving its business would be advantageous to the key suppliers. Some suppliers were apprehensive, but hopeful and willing to participate. Many had never been asked for the unexpurgated version of their ideas.

The suppliers came. And the ideas flowed and were captured. Individual sessions with each supplier were attended by key, multi-function customer personnel (including sales) who either dealt with a supplier or who were impacted by them. The ideas that came out of each meeting were not trivial. Many were multi-million dollar ideas that would reduce costs, improve market competitiveness, and increase revenue. One of the supplier meetings that involved several suppliers of transportation and logistics who had never before met in the same room produced ideas which were especially huge.

You may wonder whether any of these ideas had been proposed before. Some of them had. But individuals at the customer had given reasons for why it couldn't happen, or the ideas had been ignored. This time senior management initiated the meeting with a compelling purpose. Some of the ideas could not be implemented overnight. Some required big changes for the customer. But the customer recognized the importance of the event and the ideas offered and knew that many held keys to future success. Now it's up to the customer to capitalize on this wealth of supplier knowledge and continue the dialogue.

- Sherry R. Gordon

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