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Breakthrough Partnering, Bringing Out the Best In Supplier Development

Author(s):

Patricia E. Moody, CMC
Patricia E. Moody, CMC, President, Patricia E. Moody, Inc. Marblehead, MA 01945, 617 631-5756

81st Annual International Conference Proceedings - 1996 - Chicago, IL

"If supplier development programs like Honda's BP have such proven paybacks, why aren't North American companies jumping to start these programs?" Dave Nelson, Vice President of Purchasing, Honda of America

The Challenge. Breakthrough Partnering's successes all hinge on excellence throughout the Value Chain. The entended enterprise must include suppliers at second, third and fourth tier levels whose performance reaches, or exceeds, quality and delivery standards demanded by first tier customers.

Customers and suppliers both, therefore, are finding ways to accelerate the improvement of supplier capabilities through a variety of methods, including on-site training, kaizen activities, formal education and training, government programs, internal consulting, paid consulting and professional associations. Not all of these resources work equally well, however, and for suppliers with limited continuous improvement resources, the choice is an important decision.

The Opportunity. Suppliers can find the resources they need to meet aggressive customer quality and delivery demands. They need to be able to assess true current performance, and hire, train and acquire additional resources. Customers need to understand that what works for their first tier organizations may not work further down the supply chain.

The Process.

  1. Audit current needs
  2. Audit current skill sets
  3. Gap analysis
  4. Review current available continuous improvement programs.
  5. Set accountability goals and review quarterly performance to continuous improvement development goals.

Excellence Models. Supplier improvement resources range from fully developed programs, like GM's PICOS programs, to customized on-site assistance, such as Honda's BP program. What works well for most suppliers? A mix of on-site assistance and training. What does not work well are programs of the month, or set training not linked to organization goals and structure.

Other improvement approaches. Training works best in organizations where employees are encouraged and expected to improve their skillls. For this reason, organizational structure and the rewards and compensation systems, must be alignment to achieve the most benefit from training and development. Traditional purchasing reward systems, traditional hierarchies, tend to damper the powerful impact of development systems.

Customer fulfillment. Where is this headed? In the next fifteen years, there will be two types of companies - those that achieve manufacturing excellence as a basic requirement to being the market, and who apply excellence practices to other functions in their process flow, including purchasing, engineering, logistics - and those who make breakeven. The only companies that will continue to inhabit the excellence group will be those that seize continuous, rapid learning and development.

The Missing Link. Excellence by itself if useless. Communications skills and systems must be equally advanced to maintain and exponentially grow the resources of the Value Chain extended enterprise. Although these simple systems go far beyond MRP and our current planning tools, to include supply chain simulation, factory simulation, expert systems, chaos systems, to the user they will appear to be quite simple.

Additional resources that procurement, manufacturing, engineering and design professionals must include teaming skills, CAD/CAM to data base linkages, and second-language skills.

The First Step. Purchasing practices will change in the best first and second tier organizations quicker than we can see them in the next 3 - 5 years. The first step to staying up is excellent supplier development and communications.


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