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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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