One of my clients was recently honored as the “Supplier of the Year” by one of their major customers, a relationship that was barely four years old. In discussing this achievement, a senior executive from the supplier organization cited famed artist Andy Warhol’s observation that “In the future, everyone will be world famous for fifteen minutes”. This executive’s comments were insightful along several dimensions:
“Of course, we were delighted. We had a celebration, and made sure that the account team working with [customer] knew how pleased we were to receive this award, and we extended that praise to others throughout our company that were key to making it happen.
“But I also told them that our ‘fifteen minutes of fame’ was over, and that we had to start anew to make sure we were doing all the right things in the year that was now underway. It’s just like the day after the Super Bowl or the World Series. Along with the recaps, there are articles forecasting who are the teams most likely to win the following year.
“That got me thinking. One of the things that struck me was the citation that went along with our award. It mentioned, for example, our ‘consistently high quality’ and our ‘track record of meeting delivery commitments’. These are things that around here, we describe as ‘basic blocking and tackling’ and as the ‘table stakes’ for a successful strategic relationship. While I never thought of it, had I done so, I think I would have expected that a Supplier of the Year Award would have been based upon some version of a ‘grand slam home run in the ninth inning’ rather than on having successfully met the ‘table stakes’ criteria.
“And the second thing that I was thinking about was that we have never had a strategy in place as to how we were going to win a Supplier of the Year Award. I keep finding examples of how we are reactive in our key customer relationships, rather than being proactive. This is another one of those examples in my mind.”
His observations prompted me to do some follow-up. While what follows is far from a statistically-valid survey, I talked with ten executives responsible for supply chain relationships, all in Fortune 1000 manufacturing companies. I would put each of these companies in the top quartiles in terms of their supplier programs, ones designed to attract the best suppliers and motivate their best performance. My guess is that what I would hear from a truly random sample of companies would involve far fewer supplier success stories than what I heard from these ten manufacturers.
My first question to the supply chain executives was “Can you give me an example of a situation in which a supplier became ‘famous’ throughout your company, and the circumstances in which their identity and action because so widely known and discussed?” Out of the ten responses, five involved a “supplier horror story”, three involved some version of a “grand slam home run in the ninth inning”, and two executives said they really didn’t have a good example that responded to my question. I reflect that the larger number of horror stories than success stories parallels everyday news reports on various fifteen minutes of fame situations. For every Captain Sullenberger than successfully lands a stricken airliner in the Hudson River, it seems there are many more reports that fall into the horror story category.
My second question asked for information on that company’s most recent “Supplier of the Year Award” and on the accomplishments that yielded that award. Most of the executives provided me a copy or link to the actual award citation. What I found was that seven of the awards were quite similar to the one given the client whose case study I provided above, in that solid performance on quality, delivery, and relationship were the factors emphasized in the wording of the award. The other three awards did in fact cite a specific contribution that was in the “grand slam home run in the ninth inning” category, including all three of the suppliers who were described in the responses to the first question.
I draw a couple of conclusions from this informal research, ones that seem to me to be relevant to decisions as to the management of key customer relationships by suppliers. The concept “First, do no harm” must be the first priority of a supplier. The fact that the instances in which suppliers became “customer company famous” most frequently involved failures in terms of quality, delivery, service, or other elements of the relationship is quite striking, as is the fact that so many “Supplier of the Year Awards” were based upon achieving perfect results in terms of “basic blocking and tackling” and “table stakes performance”. Giving this anything but the highest priority is a prescription for failure.
The firms with which I’ve worked that perform well along this dimension have carefully-constructed dashboards, ones that have been vetted with their customers and that are reviewed on a high-frequency basis, both internally by senior management and in collaboration with their customers. In these top-performing firms, the organization as a whole, not just the account team, knows that achieving targeted performance levels on the metrics included in these dashboards matters, and that it is an imperative to get ahead of problems before they impact on customer relationships and perceptions. A third characteristic of these top-performing teams is that there are no “gatekeeper” positions that thwart supplier-customer interactions. While the account teams have significant responsibilities, others in various job functions know and frequently interact with their counterparts in the customer organization.
My second insight relates to the opportunity to hit “grand slam home runs in the ninth inning” and the desire of the executive quoted earlier to transform the relationship to a more proactive state. Along with reflecting on the examples provided in my informal survey, I looked at the supplier success stories that I’ve heard over the years in various interviews with customers about their suppliers. Admittedly, it has been hard to find patterns. My examples are more like a mixture of “grand slam home runs in the ninth inning”, “100 yard kickoff returns as time runs out”, and “buzzer beater shot from half court in the NCAA finals” – all heroic, but not exactly peas in a pod. Nevertheless, there were three findings that occurred often enough to warrant mentioning.
The first was that many of these heroic contributions involved something that was “new” for the customer or for the relationship – new product, new technology, new market, new competition, new regulation, etc. In the case studies that involved such “new” challenges, it was clear that future-focused discussions between the supplier and the customer were key to success. Asking questions like “What’s keeping you awake at night?” and “What are the new challenges in your strategic plan?” and “What changes in our contributions are going to make a difference to you over the next year?” must be part of the dialogue if the supplier is to have a good chance at successfully contributing to meeting the “new” challenges facing their customers.
The second observation is that many of these heroic contributions originated in discussions between functional experts in the two companies, not as a result of ongoing supplier account team interactions with the customer’s supply chain team. This is again a reinforcement of the importance of building strong relationships across the key job functions in the two organizations. In the examples I’ve reviewed, the underlying elements of the opportunity for the contribution were complex and technical, not the types of topics that are usually on the agenda of account team meetings with the supply chain team. A few examples involved problems being faced by the customer that were barely connected to the supplier’s products, but happened to be ones on which the supplier’s technical experts had insights from working with customers in other industries. Not only must these interactions take place, but the supplier team members involved in them must learn to ask the same questions that were described above as elements of a strong future-focused relationship.
The third observation is that the suppliers that were involved in these heroic contributions were proactive in sharing their own experiences with their customers. As even the executive who was quoted above observed about his company, it is quite easy to be reactive, to respond to information and requests provided by the customer. It is much harder to be proactive, and to share ideas with the customer that might spark an idea and provide the foundation for collaboration. Some suppliers even avoid doing so out of fear of leaks to competitors or that the customer will turn around and include the concept in some future request for proposals. The need to manage such possibilities is real, but the opportunity to elevate the relationship with a customer through such sharing of information and insights is also quite real, often enough the foundation for a real supplier success story that a firm wishing to be proactive needs to figure out how to battle through the problems and make it happen.
Achieving a positive “fifteen minutes of fame” with key customers is a most worthy goal, one that should be part of the plan for 2014 and beyond. The lessons that have emerged from the discussions cited above emphasize two actions that must be part of the program. First is taking all the steps necessary to ensure that “basic blocking and tackling” is a reality throughout the corporation, that senior management and customers alike know of the targets and of the commitment to achieve them, and that the resources and problem-solving skills are in place to ensure perfect performance. It seems that this alone can go quite a way in terms of allowing a supplier to achieve a positive “fifteen minutes of fame” with their customers. The second element of the program involves taking proactive steps through which opportunities can be identified for game-changing contributions to key customers. Doing so is clearly as much an art as it is a science. Creating a future-focused relationship that spotlights “new” challenges, ensuring broadly-based interactions across key job functions in the two firms, and bringing insights from within the supplier’s firm to its customers are among the steps that can help in this regard.