Issue link: https://iconnect007.uberflip.com/i/1524755
14 SMT007 MAGAZINE I AUGUST 2024 I am a believer in "best price first." Create and Maintain a Level Playing Field You should never "give" any business to any supplier, ever. I oen had suppliers ask why I didn't "give" them a piece of business they quoted. at just isn't the way it should work. Your job is to create and maintain a level play- ing field where the best suppliers have a consis- tent chance to win new business. To communicate that the field is level, you must make your expectations clear. If you care most about initial cost, lowest NRE, long-term cost reduction, total cost, life cycle, etc., then tell them. Give the supply base the opportunity to earn your busi- ness based on what matters most to you. ere is no good reason to make them guess. But make absolutely sure your message as to what matters most is demonstrated by your actual actions. Here's an example. I am a believer in it. If my business matters, tell me the lowest price you can provide from the begin- ning, and we will award business accord- ingly. Despite my position on this, I initially received many updated offers from suppliers aer they were informed that they had lost out on an award. In some cases, the updated offer was more attractive than the awarded level. Despite the temptations to realize these short- term benefits, by still saying "no" the behav- iors changed over time as they saw the actions match the words. e initial offers from sup- pliers ultimately evolved into "best price first" because the actions and words aligned. Truly Reward the Best Performers Many of you are likely involved in some sort of supplier measurement program. Make sure that your measurements are aligned with what you are telling suppliers. When I moved into a supply management leadership role, I inherited a very robust sup- plier measurement program. ere were four levels of performance with very clear expec- tations set for each level. e trouble was the majority of the spend was with the lowest two categories with some of them having been in a self-explanatory "conditional" category for many consecutive years. Why was this? While we talked about qual- ity, technical support, cost reduction, respon- siveness, and many other attributes that we said were important, the order still went to the lowest purchase order price. We said one thing and did something different, and the sup- ply base knew it. As to actual supplier performance, we got what we deserved: It wasn't good. How did it change? e low- est PO price stopped winning business automatically. e cost of non-conformance in all areas was factored into decisions. Ulti- mately, over 90% of the spend was shied into the top two categories of performance. Just as importantly, those top categories became more aggressive about pricing because they were confident that per- formance mattered in the long term, and their business would grow as a result. Bottom line: I believe that you can really have both the lowest cost (not just "total cost" but even PO price) and the best performance at the same time if you are committed to achieve it with a long- term perspective. Don't Jump Around Just Because You Can As the customer, you can always rational- ize that you are "right" but the reality is that we are oen wrong, or at least less than fully informed. Suppliers, of course, are also oen wrong. We both are. With that understanding, when things go wrong, work toward a mindset that concen- trates on "what happened?" not on "who did it?" is is an example of approaching situa- tions with an abundance attitude as opposed