Jun
2
The concept of suppliers and customers having such a trusting relationship that they can work together collaboratively and seek ways to reduce the cost of items and that they share information and data on a very open and transparent level was almost unheard of 10 or 15 years ago, but is now becoming much more common place.
Some who have been involved in either procurement or supply for some time and remember just how confrontational the process used to be, are still slightly nervous about it. After all, doesn’t that give the customer the opportunity to beat the supplier over the head and reduce costs until virtually no profit is made?
Well in fact, there is no reason to be nervous about this process; it is actually a mutually beneficial and constructive relationship when it is carried out well, so it really is nothing to fear!
The Open Book Policy
An open book policy is nothing more than an agreement to view data and financial information relating to costs incurred in any one part of the supply chain. So the supplier and customer can work together to ensure that costs are minimised where possible.
Obviously there has to be an element of confidentiality built in to the agreement and the customer will not be able to divulge the information seen to the supplier’s competitors.
Benefits To Open Book Policy
The open book policy, if undertaken correctly will ensure that the supplier is helped to retain the customer’s business, so in turn the supplier will be kept stable and will also be able to meet the customer’s needs.
The negotiations involved in setting up new supply contracts will all be done in a manner that is open and transparent and enables the customer to buy from suppliers that s/he trusts and who offers the best overall value.
Sometimes the customer can even help the supplier by suggesting ways that they may be able to source some raw materials from companies that offer better value for money, thereby reducing the costs of the end product further.
Building A Relationship Of Trust
For any open book policy to succeed there has to be a relationship of trust and it is this which will then further assist the open book policy to succeed. It will not be constructive or even remotely successful if the supplier does not trust the customer.
Larger companies may often invoke open book policies when it comes to their suppliers, but for some new suppliers, it can be slightly nerve jangling, because they are not used to the system and moreover they have not yet built up the relationship to such an extent that there is a real sense of trust there. But as the relationship develops the trust will grow.
Contrary to Confrontation
Using an open book policy with suppliers is a concept derived from Lean thinking. Within this philosophy, there is no confrontation with suppliers, because the Lean way of being is to work on a collaborative basis with the supplier to ensure that the supplier is kept content and that the relationship is based on collaboration.
So there is no room for confrontation within this process and any supplier or customer who resorts to being confrontational with the other party is not adhering to the spirit of the relationship.
If it is used as a stick with which to beat suppliers, they will soon find other customers who will treat them with more respect, leaving the customer potentially with the headache of arranging a new supplier, so it is good business sense to ensure that this the relationship is a respectful one!
Jun
2
The Importance Of Training Your Staff To Improve Supply Chain Performance
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Supply chain performance is a real issue, not just to the customer, but also to the supplier. In fact the supply chain performance can be critical for companies to manage to survive; without a good supply chain that is performing well, businesses can feel as if they are trying to do business with one hand tied behind them.
One of the most important things that can be done to ensure that the supply chain is operating at its peak, is to train staff in all aspects of the supply chain!
Staff Are Key To Success
Within any organisation it is often said that the most important asset is the workforce. They can hold the key to success and failure and this is certainly the case within the supply chain.
Staff need to be trained to see the ‘bigger picture’. There is often a feeling that staff involved in the supply chain only need to know the exact duties that they need to perform. So if a member of staff is involved in working on a conveyor belt, checking that items are finished to a certain size, then that is all they need to know, isn’t it?
Well in fact it is really helpful if those staff know exactly why the components need to be a certain size. If they are too small they will not be of use to the customer, but if they are too big they will get stuck in the customer’s machinery, so again they are of no use.
Thus the components have to be a specific size and care needs to be taken to ensure that staff within the supply chain know how vital their role is and how they fit into the process.
Knowledge Is Valued
Staff who are well informed and well trained will be more useful within the supply chain because they feel more valued; they are no longer viewed as the cogs in the wheel; they are valuable members of the team.
It is hardly rocket science to assert that staff who feel valued and more part of a team are more dedicated and diligent staff; so the training is well worth the effort in terms of productivity.
Knowledge Offers No Excuses
Staff training can eradicate the excuse of ‘I didn’t know’ or ‘No one told me’. These excuses are often offered by staff who have not performed well and a problem has occurred. Within the context of a supply chain this can lead to significant problems.
If staff are trained then they will have to accept responsibility because they DID know and they WERE told, so there is no room for any excuses.
This can help to improve productivity within the supply chain because staff become more accountable within their own individual roles.
Customer’s Staff Should Be Trained As Well
In order to promote a good working relationship between the customer and supplier, it can be helpful to have the customer’s staff also trained in supply chain issues, so that they can be aware of the exact nature of the supply chain and the issues that the suppliers face.
In some instances, the customer’s staff can be sent to the supplier to train the supplier’s staff how to make improvements, but this ends up being a mutually beneficial experience as the customer’s staff receive some ‘on site’ training simply by being on the supplier’s shop floor for a period.
Staff training is therefore very important if the supply chain is to perform well and be improved!