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Building Stronger

Customer-Supplier

RelationshipsKimball E. Bullington, Ph.D., P.E.

Stanley F. Bullington, Ph.D., P.E.

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Why Long-Term Relationships?

• Increasing trend toward global supply

• Higher baseline performance

• Increasing focus on time to market

• Dependence upon suppliers for technology

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Why Long-Term Relationships?

A long-term relationship between purchaser and supplier is necessary for best economy. How can a supplier be innovative and develop economy in his production processes when he can only look forward to short-term business with a purchaser?

W. Edwards Deming, Out of the Crisis

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Why Long-Term Relationships?

• Trend toward LT contracts since 1990

• Pressure to reduce price

• Pressure to reduce transaction costs

• Consolidation pressures

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Challenges for a Useful SCR Model

• Relationships are critical

• Trust may be low

• Literature focuses on causes of failure

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Challenges for a Useful SCR Model

• Limited number of published SCR successes

• Successes could be culture-dependent

• Model should be simple & proven

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Family Strengths Research

• Strong families

• 20+ years of research

• Over 6,000 successful families surveyed

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Family Strengths Research

• Culturally diverse population

• Compares favorably with other taxonomies of family success

• Summarized in six characteristics

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Family Strengths Research6 Characteristics of Strong Families

• Commitment (trust)

• Good communication patterns

• Ability to deal with crises

• Spiritual wellness

• Spending time together

• Appreciation

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Six Characteristics of Successful SCR’s

• Commitment

• Good communication patterns

• Ability to deal with crises (change)

• Spiritual wellness (principles-centered)

• Spending time together

• Appreciation / feedback

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Commitment: Concerns

• Is this the right supplier?

• What about unequal commitments?

• Is management committed?

• What are the implementation issues related to maintaining commitment?

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Commitment: Implementation

• Selection prior to initiation

• Two-way criteria for success

• Regular performance reviews

• Management committed to proceed

• Participation requirements identified early

• Implementation of complete SCR model

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Matrix for SCR SelectionSurveillance (2) Long-Term

Relationship (1)

Transactional (4) Contractual (3)

Increasing Spend / Value Potential

Incr

easi

ng

Ris

k /

Com

ple

xity

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Communication: Concerns

• Replace face-to-face communication with technology?

• Good communication = $$$

• Communication between technical groups

• Role of agent

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Communication: Implementation

• Face-to-face communication increased & facilitated by multiple technologies

• Support for communication forums

• Triad as core team

• Agent investments in communication

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Dealing with Change

• New product development process

• Common improvement process

• Objective performance measures

• Conflict resolution by team leaders– commitment management– communication assurance

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Shared Principles

• Principles Centered Leadership

• Two-Way Performance Measures

• Follow-through on Commitments

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Spending Time Together

• Quarterly performance reviews

• Team building dinners

• Commitment to keep the schedule

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Appreciation

• Celebration of critical improvement

• Recognition distribution

• Other forms of recognition

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Buil ding S t r o ng C ust o mer -Suppl ierRel at io nships

Time To get herAppr ec iat io n/

Feedbac k

Capacityfor

Change

Capacityfor

Change

Strongcommitment

Strongcommitment

Commonpr incipl esCommon

pr incipl es

Excel l entCommunication

Excel l entCommunication

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Building Stronger Customer-Supplier

RelationshipsKimball E. Bullington, Ph.D.,

P.E.Middle Tennessee State

UniversityStanley F. Bullington, Ph.D.,

P.E.Mississippi State University