Leadership Skill 9-Customer & Supplier Collaboration

By Paul Bohr, Chief Transformation Architect


Transformation Leaders will be challenged to identify and capture opportunities in the end-to-end supply chain, and some of the largest opportunities are in collaborating with customers or suppliers.


The Transformation Leader must be capable of developing sustained customer and supplier partnerships that align organizational priorities, resources, and projects to deliver outcomes beneficial to both parties. These partnerships typically encompass three key areas of collaboration:

· Business Planning

· Product and Process Optimization

· Strategic Projects


Business Planning

Many quick wins can be accomplished by synchronizing planning between customers and suppliers. Depending on the importance of a customer to a supplier (constituting 60% of a suppliers revenue versus 5% of a suppliers revenue), immediate steps can be taken to improve performance by aligning plan release dates and risk management in forecasts accuracy, buffers, inventories, and economic order quantities.


Product and Process Optimization

Large Opportunities typically exist between customers and suppliers to optimize product design and specifications with supplier capabilities and processes. Minor product design or specification changes can yield significant cost or customer value improvements if the transformation leader facilitates the investment in collaboration. Tradeoffs in customer value priorities in features and product performance related to process capabilities and performance can be made at many levels to optimize strategic outcomes.


Strategic Projects

Opportunities for optimizing the customer and supplier partnership extend to long term major investments in capabilities that differentiate teams to the customer and marketplace. An example of this kind of collaboration that personally facilitated, was the major capital investment required for a supplier to acquire expensive equipment for the production of increased diameter silicon wafers for computer chips. Although the customer and supplier had a long term relationship, the timing, level of trust, and contractual obligations required for that kind of investment required a much higher level of collaboration and partnership. Customers and suppliers must synchronize where they are investing in key capabilities, and typically aligning in the top three projects is a great start. 


The Transformation Leader must possess the ability to establish the common priorities, collaborative events, and a common approach to improvement between customer and supplier leadership teams to deliver beneficial strategic outcomes to both parties.

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