ASQ - Team and Workplace Excellence Forum

Online Edition — December 2002

In this Issue
Customer-Supplier Communication Systems: 360° Communications Loops
Get Off the Island!
Bridging the Gap at Work
From Our Readers
Letter to the Editor
FISH! The Book and the Video: A Review
Chapter News

Features

Book Nook
Our Readers Say...
Editorial: From Our Perspective
What's Up?

December 2002 News for a Change—Home Page

NFC Index

AQP Home

From Our Readers
Letter to the Editor

The letter below was submitted by an AQP member in response to our November survey on customer-supplier teams. Although the author asked to remain anonymous, the history recounted in the letter and the questions raised sound familiar to many of us.

The time was the mid-1980s. There was a shortage of, let’s say, methanol, a critical raw material for our business. Methanol suppliers were declaring force majeure, and the buyers were scrambling to see where they could find a good quality supply. A short time prior to this crisis, we had committed to single sourcing with our methanol supplier, a big step for corporations during that time to experiment with partnering, and enough to make any corporate type worry in the current situation.

We had put together a team of plant purchasing, quality, and technical people with the supplier’s counterparts, and the team visited both our site in the Midwest and theirs in Louisiana. The team had been working on problem solving on product variables and sharing quality improvement practices; based on the relationship we had developed with that sole-source, contracted supplier, the plant was assured not to worry about supply. The relationship established with this supplier not only had reduced variation in SPC charts in our processes and had given us competitive pricing, but now it also was paying off with an assured supply during a tight market at no additional cost. It was a win-win for all involved.

During that same era, there was a customer on the West Coast with whom our sales organization was having problems. The customer had molding problems with parts and was blaming us, their raw material supplier. We started a team of our quality, sales, and marketing functions to work with their supervision and operators, doing problem solving and training in quality tools. The customer started finding problems in their own operations, learning how to manage some of their processes more effectively, and the requests for rebates on our material faded into a memory.

These are just a few examples of how customer-supplier teams were used at the time. The business continued to evolve in customer interfaces into the early ‘90s. Marketing was pushing our organization to take teams into our customers’ houses to lead groups of customers and plant people through a partnering exercise, using hired consultant facilitators. The discussion centered on the customer’s visions for where they were going in the future and how we, as their supplier, could help them achieve their vision. This exercise helped the customer vocalize where they were headed and rally their team. It helped us understand their business and where we needed to aim in product improvement and development to support them and keep their business. We became a valued and included partner in our customers’ futures.

These exchanges were not free, and it’s often hard to see benefits beyond the immediate output of upfront cost. How quickly we forget what we’ve learned.

In the mid-90s, our business was bought by another company. Teams were not a part of this company’s culture, and with the lack of interest in these endeavors, remnants and learnings gradually withered and died.

This company’s philosophy toward suppliers was one of brute force; they had large volumes with which to bargain and a lot of cost leverage with competitive bidding. When supply became tight, supplier companies delighted in paying back that which was taken from them in hard negotiations by raising the prices on tight supply items—if you could get them. Overall, has our business suffered as a result of this? That’s hard to measure. Large volume demands respect, and in lieu of relationships, we seem always to be supplied, but we’re never sure if the problems with our processes are due to our causes or those brought to us by our supply line. We have a lot less knowledge now in the organization of how raw materials affect our processes although there is no shortage of problems and off-spec material in the processes.

One part of our culture the new company acquired was that of allowing customers to visit the plant. When there were issues, we maintained that customers be allowed to visit us, or we would send a small plant team to visit them and understand their perspective. This did not translate to a full team operation, but it assured customers that we were trying to fix problems. That is the current model of customer interactions.

Bottom-line results are hard to assign. In the care of the new company, our product volume—read market—has been reduced by half, and we’ve yet to have a profitable year. The product volume decrease could be assigned to a number of causes; in some cases, management has chosen to walk from some perceived nonprofitable business, the economy has not been kind to many businesses of late, and offshore competition is stiff. Would our costs be lower for supplies if we had teams? Would our product quality be better with less cost of poor quality if we had more consistent raw material streams? Would we be able to retain business with customers, and maybe even keep pricing profitable, if we had teams with customers to solve problems and build relationships? If sales and the plant were working together to meet customer needs, would we have the other half of the business we lost?

All of this is hard to quantify and that has always been the challenge to quality professionals—proving to management that sowing those seed dollars reaps future growth benefits. One thing I do know and can state: It feels a lot better working in a spirit of cooperation and teamwork toward a common objective than in competition and at odds with our own suppliers and customers. It’s not free upfront, though the overall cost to the business may be less over the long term. In this age where resources are squeezed to the bare minimum, maybe it’s all we can afford and for which the supply chain is willing to pay.

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