CompassLead

Don’t lose customers by not understanding your suppliers!

admin — Thu, 15 Nov 2012 06:42:35 +0000

A client started receiving order cancelations from customers whose orders were weeks past due. A special steel that was required to build the products for fulfilling those orders had not been delivered by a specialty steel supplier, and they continued pushing out their delivery date.

When I questioned the head of purchasing on why he tolerated this supplier’s performance, he replied “They have the lowest price by far for this product, their deliveries used to be more on time, and I know we are their number three customer for this product”. Apparently, something changed. In a meeting we arranged with the supplier, and as a result of our prompting, the supplier revealed two previously unknown factors that had a direct impact on my client. 1. My client received high volume discount pricing for their modest order quantities because the supplier only fulfilled their orders when added to the high volume orders from their number one or two customers. 2. The number one and two customers were now ordering less frequently which caused the measureable delivery delays.

Had the supplier’s constraints been understood at the time of the first purchase, it would have been easy for their salesperson to proactively notify the buyer of the less frequent manufacturing runs. Also, if known, this could have been a checking point in the periodic buyer / supplier review meetings. With an advanced notice, the buyer and management would have had the opportunity to consider options like maintaining the current stocking levels but purchase those quantities needed sooner from a low volume / short lead time supplier (albeit at a higher cost), increase the stocking levels, some combination of both, or increase lead times to the customers. No matter what solution they chose, they could have prevented losing customers.

The takeaway? It’s up to you, the buyer, the purchasing company, to know what your suppliers are best at and the “why” and “how” they are capable of delivering to you what they promised.

Here are a few questions you can use to start gaining that understanding.

Are the skills and infrastructure required to produce the product you are asking your supplier to provide at the core of their competency or somewhere closer to the fringe?

Are your product specifications, tolerances, documentation requirements… common or within industry standards, and are they typical for this supplier?

Who are the bread and butter customers for this supplier? Would you be one of them?

What other markets does this supplier serve? Do these markets have foreseeable events that could impact this supplier and consequently the supply of your product?

Does this supplier’s location, facility, operation, process, equipment, people, experience, and culture align with their quoted product, price, quality, responsiveness, lead times, and advertised customer service levels?

What are your thoughts?

Look for upcoming blogs on Year End Inventory Tasks, Effective ERP Use, and Supplier Report Cards.

Tough steps for business owners with ERP, Supply Chain, or BPI Projects

admin — Wed, 24 Oct 2012 21:59:09 +0000

For company-wide initiatives like ERP, Supply Chain or BPI Implementations to succeed, there are often two tough steps that senior management or company owners need to take early in these projects, and most don’t talk or write about them. 1. Find “Joe”. 2. Shoot “Joe”.
“Joe” is the employee who is resisting the project, has some level of influence on the project’s team, and is actually undermining (usually covertly) the project with their behaviors.
I have seen “Joe” hold titles from “order picker” to “company officer”. Their behaviors have included repeating passive-aggressive negative comments, omitting information helpful to the project, providing misinformation, sending out signals that differ from the company owners, and even actions serious enough to be found unethical in a court of law.
“Joe’s” impact on the project becomes visible when seeing evidence such as frustrated team members, delays in reaching milestones, rehashing issues already thought to be resolved, the growth of opposing camps within the project team, and even halting the project. If senior management or the company owners do not address this problem quickly, even highly motivated employees can eventually “get it”, and accept that “Joe’s” behaviors are tolerated. When that occurs, the once “high-bar” of performance being reached for by these employees can get lowered to “I guess this is good enough with all things considered”. At this point project costs increase, the company never gains the full benefit (ROI) from the project, and that “good enough” expectation of performance permeates throughout the company and can eventually reach your customers.
Certainly, all efforts, should be made to help “Joe” understand why their positive involvement is important to the project and the company. That’s why they were on the team from the beginning. Converting them is the best outcome for all, and if truly achieved, it’s great. It starts by senior management or a company owner having the “converting” dialog with “Joe”. There are shelves of books written about that. But, even if “Joe” says all the right words during that dialog, follow-up is needed. “Joe” and the team members need proof that you are serious about what you expect. Going back to “Joe” and to the project team for evidence of his buy-in and positive participation is imperative. Avoiding this follow-up, or simply asking, “how’s it going” while passing through departments does not cut it. Avoidance or passive follow-up allows poor employee attitudes and performance to fester. When following up, if you find “Joe” is not converted, make no mistake, “Joe” must be shot by eliminating or marginalizing their costly influence so the project team can regain focus, energy, and achieve the projects best results for improving the company.
Depending on “Joe’s” position, influence, time with the company, or relation to a company owner, this step can be quick and easy by simply removing them from the team, or may require some well thought-out professionally and personally sensitive steps of action. In family businesses, this can be especially challenging and tough to face. I get it. However, keep in mind, that all those who rely on the company’s success are looking for someone to take that tough step. Is it you?

CompassLead earns new project

admin — Wed, 16 May 2012 03:02:44 +0000

A current CompassLead client continued to show their trust in our guidance by awarding us the project of helping them select, and implement a shop floor scheduling and reporting system for their discrete manufacturing operation. This was added to our…

Don’t ask for what you won’t understand

admin — Tue, 15 May 2012 21:12:36 +0000

I have worked with many successful business owners and CEO’s who provided engaging and active leadership for their companies until it involved their IT related projects. These otherwise very capable professionals would shy away from these projects because as one CEO told me “I don’t understand all that technical jargon the IT Director throws at me. I get frustrated because I can’t get what I need done, and frankly those conversations feel embarrassing.”

My advice to him was simple, “Ask the questions to which you understand the answers”. Don’t ask “how are we doing on that customer service enhancement?” Ask your real question: “When will the customer service department have the information on their screens they need for answering customer inquiry calls without having to call them back?” By visibly engaging in these projects, you validate their importance to the company in the eyes of your staff. Questioning your IT staff in this manner reminds them that their technical projects are there to help the company’s operation serve your customers better at a profit.