Leardon Solutions | Successful Supplier Management: Part 2

The first posting on the topic of successful supplier management entitled Creating and Maintaining Successful Supplier Relationships: Part 1 pointed out that a successful supplier relationship consists of five vital characteristics which result from a relationship that encourages commitment and capability. These five characteristics are shown in the table below.

These vital characteristics of a successful supplier relationship were identified by the Leardon Solutions program managers after studying dozens of supplier relationships, both good and bad. To reiterate, the premise for these vital characteristics is that the supplier manager must influence the supplier to believe that the relationship is worth the time and that their team can do what the manager requires.^[1] In other words, the supplier must be committed and capable and if a supplier manager can improve the commitment and capability of the supplier, the relationship will improve.

Each of these vital characteristics impacts the supplier commitment, capability, or both. In order to improve the supplier commitment, the supplier manager should work on improving the Respect for Individuals and the Partnership. If the supplier manager focuses on creating a relationship that has Properly Managed Risk and Complementary Capabilities, then the supplier capability will increase. Finally, improvement of the characteristic of Growth and Development will improve both the supplier commitment and capability. This is better described in the simple table below.

Five Vital Characteristics of a Committed and Capable Supplier

So how does a supplier manager influence these five vital characteristics for improvement of supplier commitment and capability? Below is a list of the actions for each characteristic that, when implemented in the day-to-day supplier management, have been shown to establish a good supplier relationship.

Respect for Individuals

1. Create an environment where everybody has the upmost respect for people and their opinions.
2. Provide open and honest communications regarding performance of individuals (both good and bad).
3. Create an environment where team members have genuine trust in each other.^[2]

Partnership

1. Allow an environment of open and honest communications about the state of the business relationship.
2. Provide consistent, stable work that enables the supplier to invest and grow.
3. Provide an environment where the teams engage in respectful debates about critical issues.^[2]

Growth and Development

1. Provide continual development of the supplier through an active development plan.
2. Minimize the employee attrition rate by showing commitment to supplier?s growth and development.
3. Develop a capable resource pool at the supplier through training.

Properly Managed Risk

1. Both the supplier and supplier manager decide what risks to take and the implications of such risks.^[2]
2. Provide a team member training program to minimize mistakes and eliminate repeat mistakes.
3. Provide a rewards and recognitions program that motivates innovation.

Complementary Capabilities

1. Understand supplier employee capabilities and balance capabilities of integrated teams.
2. Continually evaluate supplier employees and ask the supplier to improve underperforming employees.
3. Focus the team individuals on using their capabilities to achieve team results.^[2]

Influencing these five vital characteristics using the recommended management actions above improves the supplier commitment and capability which results in an improvement of the overall relationship. Remember that if the supplier thinks the relationship is valuable, they will remain committed. And if the supplier thinks they can do what is required, then they have the capability to excel and improve.

^[1]Influencer: The Power to Change Anything, page 132, Kerry Patterson, David Maxfield, Joseph Grenny, Al Switzler, and Ron McMillan, October 2007.

^[2]The Five Dysfunctions of a Team, A Leadership Fable, Patrick Lencioni, Wiley, 2002.

Source: http://leardon.com/successful-supplier-management-part-2

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