One of the elements of innovative operations strategy is partnership with customers and suppliers. Customers can provide vital input to product development, distribution center location and supply chain design. Supplier partnerships can also help with product design, reduce materials costs, and improve inventory turns and on-time shipments. Communication must be open and frequent for these partnerships to work.
Defining Success Together
First and foremost, all parties must set expectations. What are shipping lead times? How are they measured? What are the specifications for materials and product performance? How will they be measured? Are there sales forecasts? How and when will payment be made? Do both parties define success in the same way?
Recently, I visited a client’s supplier and discovered that the supplier didn’t know what the inspection points of the product would be, so they had no idea what the critical performance criteria were. They simply did what they thought best and hoped it would be good enough.
I then visited a client location and found that what they defined as product failures “worked fine” when they were returned to the supplier! It turned out that the two parties were measuring performance differently. This caused big delays in resolving the issues and hard feelings on both sides. Had they defined success together from the beginning, this could have been avoided.
Communicating expectations and setting common performance measures are part of establishing strong supplier/customer relationships. Good communication is vital.
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