Eaton's supply chain management practices
By Paul Teague, Editor in Chief -- Purchasing, 9/13/2007 6:00:00 AM
Our sincerest congratulations to Eaton Corp. and to Rick Jacobs and his entire supply chain team for winning the Purchasing Medal of Professional Excellence. You can read about all the procurement achievements of this progressive and diversified manufacturer in the pages of this issue and on Purchasing.com, where we've also included examples of score cards, software, information dashboards, training curriculums and other tools Eaton uses to maximize its purchasing efforts. In this space, I want to highlight three particular aspects of Eaton's procurement efforts and organization that are especially noteworthy:
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Support from the top. You can't get far in any business transformation—procurement or otherwise—without support from the executive suite. Alexander M. (Sandy) Cutler, president, chairman and CEO of Eaton, is a role model for support of procurement excellence. "Procurement is a major source of additional leverage in business," he says, "so we need a vital and highly capable supply chain to help us design new products and deliver them." Jacobs, vice president of supply management, came to Eaton three-and-a-half years ago from Bendix and has a wealth of operations experience. An engineer by education, he is an innovative thinker when it comes to purchasing and supply chain issues. Cutler and Rick's immediate superior, Vice President of Business Systems Rich Holder, encourage that kind of innovation.
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Support from suppliers. Eaton wants to be the most admired company in its markets, and it wants to be its suppliers' favorite customer. I talked to several suppliers about what it's like to work with the company, and, as you might expect, got glowing reports. But one supplier in particular had some comments that went beyond the expected. "I feel like an insider there, not an outside supplier," said David Bohn, vice president of Summit Energy, which manages the supply side of Eaton's electricity and natural gas needs for North America and Europe. Through their emphasis on collaboration, he said, Eaton makes suppliers feel like a part of the company and its successes. "Even their supplier-awards program is a kind of brainstorming session," he adds.
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Support from employees. The Eaton supply chain staff is a high-energy and highly educated group of professionals. The high energy is part of their individual personalities. The education comes in large part from a very thorough Supply Chain Functional Excellence program—essentially a curriculum of courses that ensures employees' skills match the requirements of the jobs they have. The curriculum also gives supply chain employees the knowledge they need to advance their careers, and provides clear paths for advancement. Naturally, the support the company gives employees comes back to the company from the employees, and everyone wins.
So again, congratulations to Eaton Corp. Job well done.
Field-service dilemma
A reader with several years of purchasing experience wrote us about an interesting challenge he has: finding ways to get suppliers to pay for the field-service activities involved in replacing faulty parts they provided. Note that it's the field-service costs in question, not the parts costs. Most suppliers, this particular readers' included, will agree to replace the part once they're convinced their part caused a problem. But they're not so willing to pay for the field service because that can be expensive.
Which is exactly why our reader wants them to pay. And fairness dictates that they should pay. Or does it? Maybe the original installation of the part caused the problem. What do you think? Let me know, and we'll publish your thoughts.
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