Outside suppliers provide the majority of the content of products created by a large number of the companies I visit, yet many of these companies engage in a sort of zero-sum contest with their suppliers, constantly competing for the upper hand in the relationship. While this strategy may pay some short-term dividends, it seldom, if ever, leads to the lasting benefit of either party.
During my time at Ford, we definitely struggled with supplier relationships, perpetually landing among the lowest-scoring companies on the annual automotive supplier survey that identified the worst and best automakers with which to work. In 2007 Ford actually came in dead last on the survey. At the same time, perhaps not surprisingly, Ford’s suppliers had become absolutely dreadful to work with. Quality issues, late deliveries, and surprise costs were just considered business as usual.
All that changed when we adopted the Matched Pair strategy, teaming supply chain and engineering leaders with a common plan, shared objectives, a powerful management system and a focus on building strong relationships with our key suppliers. The Matched Pair strategy helped not only to improve cost, quality, and delivery; it contributed to a much better working environment for engineers and supply chain managers.
I found this experience of close collaboration to not only boost results, but morale as well, and helped to create a high-performance team. Working on such endeavors can be one of the most fulfilling aspects of one’s career. (A story you can read about in more depth in Designing the Future if you are interested.)
So when my matched pair partner, Susan DeSandre, joined Apple as a supply chain executive she was more than a little concerned with the lack of structure for enabling supply chain and product engineering to work together. Susan had lived through the bad old days at Ford and definitely did not want to go back to that.
But as she reflected on her time at Ford she realized that the changes were less about the matched pair structure and specific processes, and much more about the relationships built between Ford and its suppliers. And it all started with the partnership forged between Susan and me along with key members of our teams.
So Susan took a chance and reached out to an Apple product VP and invited her for a coffee. She shared her Ford Matched Pair story about how we had changed the way we worked with each other and our suppliers. It clicked. And while the specific matched pair framework was not adopted, many of the basic principles were. This meeting turned out to be just the first of many “coffees” and a stronger relationship between product engineering and supply chain that extended to Apple suppliers.
As Susan says “there are no excuses. This approach worked in two incredibly different organizations. Ford was smart, disciplined and focused, while Apple was the worlds biggest startup; and in both cases, taking the time to build relationships, fostering trust, finding common ground, both inside and outside the organization was fundamental to the success of product creation. If you are not doing this then I guarantee you are not creating the best products you could. And you are certainly not building the best working environment.”
So how do you maintain a strong and collaborative relationship while simultaneously getting the best cost and quality from suppliers? According to Susan, it lies in understanding the work. Especially manufacturing. “Supply chain professionals have to understand how things are made as well as the critical attributes of the product. They aren’t there just to release RFQs and issue purchase orders. They can and should be fully contributing members of the development team”