OBSERVATIONS FROM A TASK FORCE MEETING

 

 

Recently I had the opportunity to sit in on an industry task force meeting where three individuals spoke about what it is they look for when making decisions to purchase products and services. As I listened to the comments, I was reflecting on how business has changed over the last 30 years since I began my career. I was also gratified to see how much the teachings of W. Edwards Deming were being adopted in the market place.

 

The first woman was from a company that spent approximately $3,000,000 dollars on services per year. She said that at least 80% of the money was spent with one supplier. When asked why she did that, she mentioned these reasons. They can turn around an estimate in an hour if I need it. They are fair. When there is a goof up, they own up to their share of the blame. We can trust them to deliver what they promised when they promised. We are partners. They help me do my job better. They help me save money. We have built a long-term relationship.

 

The next person to share his insights represented a large manufacturing company that purchased $30,000,000 of this particular product and service. He said first of all we realized that dealing with fewer suppliers was to our advantage. We went from 100 suppliers to 3. We insisted that those three basically open their books to us so we could see how we could work together to save money. We let the three know that they had our business as long as they could give us the turn around and quality we demanded. We suggested that the three of them work together in anyway they wanted to supply our needs. Remember that they were former competitors vying for our business. We no longer bid our jobs. It is a waste of time and money. We realize that on any given product or service we could probably get it done by someone else at a lower first cost. But we know that the total cost would be more. We are building relationships. We are getting faster turn around and cost reductions.

 

The third person represented an organization that only purchased $300,000 of these particular services and supplies per year. He was less sophisticated in his purchasing, but exhibited many of the same expectations. He said most of what he purchases is based on the relationships he has built over the years. He said he was working toward fewer suppliers. He didn’t buy on lowest price and rarely went out for bids except when a new product or service was necessary. He said he expects his suppliers to bring him ideas that will help him out.

 

So what is the bottom line? Several things stood out as I listened.

 

• Even though no one used the word, all of them were thinking in terms of “the system.” They realized that no one operates in a vacuum. They talked in terms of the system from supplier to the ultimate customer- the end user. They realized that there is more to the cost of a service or product than the first cost.

 

• They were obviously working to reduce variation. Going from many to few suppliers is a major step in the right direction.

 

• They were all indirectly talking about cooperation instead of competition. They didn’t see the world in win lose terms. They put the emphasis on how can we improve and be more efficient rather than how can we beat the guy down the street.

 

• They were constantly looking for ways to get lean, to shorten the supply line, to shorten the cycle time -- to reduce waste in the system.

 

• They were very well aware of the human dimension -- the psychology of doing business. The word relationships was probably the word most used when they described what drove their buying decisions.

 

We are making progress. I hope your company is successfully adopting these principles.