Operations Payoff

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The Three Types of Communication That Are Vital for Strong Partnerships

Information sharing on several levels is vital in creating collaborative relationships. Many companies think they have good partnerships with their suppliers, but in reality they haven’t reached the level of trust needed to create world-class performance.

First, both parties need to be very open in sharing cost information. Cost structures, Bills of Materials and design information needs to be shared so the customer can improve their product designs to reduce cost and improve performance.

Second, suppliers need to be deeply involved with product design in the beginning and throughout the product life cycle. Involving the supplier in design reviews, cost reduction efforts, and quality improvements (through technical capability studies) can help you reach new levels of performance and cost reduction. It can also reduce lead times and risk in the supply chain.

Third, both sides should use scorecards. I’ve known many suppliers that thought they were doing just fine, only to find out – when it was too late – that their customer perceived their performance as substandard. I’ve also seen customers whose policies made it difficult for the suppliers to meet their expectations. Both sides need to share performance measures frequently. True partnerships are based on trust and communication.

© 2014 – Rick Pay – All Rights Reserved

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