How good 'partners' behave
By Staff -- Purchasing, 3/12/1998
The American Productivity and Quality Center (apqc) recently completed a study of best-practice companies in supplier relations. Together with 16 sponsoring organizations, apqc identified and studied seven organizations that excel in their supplier relationships: Armstrong, bose, Deere & Company, Herman Miller, Honda, Motorola, and Sun Microsystems.Here are some of the key study findings:
* Best-practice companies usually don't use the term "partnership" to define relationships with their closest suppliers.
* Best-practice companies have multiple levels of supplier relationships.
* Partnership suppliers typically make up 20% of the supply base and 60%-100% of the purchased dollars of best-practice companies.
* Best-practice companies use cross-functional teams to establish partnerships.
* Legal contracts are not a key tool in establishing and maintaining partnerships.
* Buying companies are willing to provide guidance in suppliers' operations.
* Buying companies are searching for very good partners, but few state they are searching for the best.
* Best-practice companies believe they offer benefits to suppliers.
* Best-practice companies consider increased assurance of supply and flexibility, and the suppliers' monitoring of their own process controls, as the most important aspects of a partnership program.
* Best-practice companies constantly conduct price tests of partner suppliers, but these tests usually do not result in business shifts.
* Best-practice companies have long-standing supplier measurement programs.
* Buying companies regard the factors they measure as extremely important.
* Best-practice companies do not measure every important aspect of partnering.
Note: The report, Partnering for Profit: Building and Managing Global Supplier Relationships will be made available to nonmembers of apqc for $395 on May 1. To order, call (800) 776-9676.
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