T H E P OW E R O F T WO

Transcription

1 THE POWER OF TWO

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3 THE POWER OF TWO How Smart Companies Create Win Win Customer Supplier Partnerships that Outperform the Competition Carlos Cordón and Thomas E. Vollmann

4 Carlos Cordón & Thomas E. Vollmann 2008 Softcover reprint of the hardcover 1st edition All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No paragraph of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, 90 Tottenham Court Road, London W1T 4LP. Any person who does any unauthorized act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The authors have asserted their rights to be identified as the authors of this work in accordance with the Copyright, Designs and Patents Act First published 2008 by PALGRAVE MACMILLAN Houndmills, Basingstoke, Hampshire RG21 6XS and 175 Fifth Avenue, New York, N.Y Companies and representatives throughout the world PALGRAVE MACMILLAN is the global academic imprint of the Palgrave Macmillan division of St. Martin s Press, LLC and of Palgrave Macmillan Ltd. Macmillan is a registered trademark in the United States, United Kingdom and other countries. Palgrave is a registered trademark in the European Union and other countries. ISBN DOI / ISBN (ebook) This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. Logging, pulping and manufacturing processes are expected to conform to the environmental regulations of the country of origin. A catalogue record for this book is available from the British Library. A catalog record for this book is available from the Library of Congress

5 To la tia Laura y el tio Josemari In memory of Archie Kvaal With love to Minerva and Tani

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7 CONTENTS List of figures and tables Acknowledgments Case studies About the authors xi xiii xv xvii Introduction 1 Chapter 1 Picking ten partners 9 Why is ten the magic number? 12 The new game 16 Smarter buying and selling 22 So what? 26 Chapter 2 Mastering the four stages of collaboration 27 Stage 1: flawless execution 29 Stage 2: total cost of ownership 32 Stage 3: value/cost 36 Stage 4: strategic alignment 39 Governance 42 So what? 44 Chapter 3 Restructuring procurement 47 Leveraging the collaborative segment 48 Separating the sheep from the goats 51 Be the most attractive customer 55 vii

8 viii Contents Setting the improvement agenda 59 So what? 66 Chapter 4 Selling the way your customers want to buy 69 Business-to-business selling is different 70 Selling to customer segmentation models 76 Key account management 81 When customers change the game 85 So what? 88 Chapter 5 Choosing your battles wisely 91 Proactive sales leadership 94 Key sales elements 96 Deploying your sales resources 102 Being the most attractive supplier 104 Delivering what customers need 107 So what? 110 Chapter 6 Developing pairs of aces 113 Success is easily killed 113 Keeping the faith 117 Negotiation II 120 It takes two to tango 123 A winning journey 129 So what? 134 Chapter 7 Building the future 137 The Rubik s cube of customer supplier partnerships 138 Driving the procurement agenda 146 Pushing sales and marketing 151 Making it all work 157 So what? 160 Chapter 8 Changing two at a time 163 From one-sided to two-sided change 163 From key account management to key collaboration management 171 Where is the win win? 176 So what? 178

9 Contents ix Chapter 9 Harnessing the power of two 181 Driving from procurement 181 Driving from sales 184 So what? 186 Bibliography 187 Index 191

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11 FIGURES AND TABLES Figures 1.1 Procurement evolution Typical mix of collaborative relationships Super-supplier collaboration The four stages of collaboration Progressive collaboration stages Supplier segmentation Nokia s supplier matrix Motivation/pressure versus performance Segmentation of suppliers from a purchasing point of view A customer supplier relationship based on more than price Procurement deployment Product sourcing strategy Leading and lagging indicators Changing customer and supplier positioning The hierarchy of supply chain metrics The two-sided staircase model for joint improvement Extending lean with dyads: the BPR/IT challenge The Rubik s cube of customer supplier partnerships The change management model Longitudinal versus lateral growth 174 xi

12 xii Figures and tables Table 4.1 New sales realities 72

13 ACKNOWLEDGMENTS We would like to thank all of those who generously gave their time and insights to help us write this book. In addition to those who helped in the case studies listed below, we are indebted to the following organizations and people: ABB, especially Dan Ahern, Frank Dugan, and Oliver Riemenschneider Bombardier Transport, especially Andre Navarri, Pierre Attendu, Charles O Donnell, Dr. Falk Mehdorn, and Michel Van Lierde Caterpillar, especially Paul Wroblewski and Tom Sandborg Knorr-Bremse, especially Heinz Herman Thiele, Dr. Frank Gropengiesser, and Mark Cleobury IMD colleagues, especially Corey Billington, Joe DiStefano, Bill Fischer, Winter Nie, Phil Rosenweig, Ralf Seifert, and Paul Strebel special thanks to IMD President Peter Lorange, and Vice-President Jim Ellert for their ongoing support and encouragement several people who have contributed to our thinking: Luc Volatier, Jussi Hekkila, Alan Hutchison, Chris Ellegaard, Kim Hald, and Dave Nelson and finally to someone who has played a key role in our work for several years: Henrik Eklund. xiii

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15 CASE STUDIES We have also learnt a great deal through our case writing activities, which play a major role in our work with executives here at IMD. The following are some of the key cases and the lessons exemplified from them any of these can be obtained from IMD: ABB and Caterpillar: transforming key account management. Dupont: debunking the role of core competencies in outsourcing. Freqon: mapping relationships between a customer and supplier over more than ten years. Hewlett-Packard: selecting and developing an EMS (electronic manufacturing services) supplier. Mabe Estaufas: squeezing suppliers can be counter-productive in the long run. Nokia Supply Line Management: a fast response to fix a broken supply chain. Numico: working with a creative supplier to develop new products. Philips Consumer Electronics: rapid response to major retail customers. Skanska & Rockwool: making joint costs visible so they can be collaboratively reduced. TeStrake: working jointly in new product development at the technical specifications stage. Thomas Medical Systems: developing and implementing outsourcing policies. Unichema: why flawless execution is a prerequisite to customer partnerships. Victoria s Secret: implementing a council of suppliers. xv

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17 ABOUT THE AUTHORS Carlos Cordón is Professor of Manufacturing Management at IMD. He is Spanish, and has special interests in supply/demand chain management, speed-based management, project management, and outsourcing. He is a consultant to multinational companies in industries including electronics, food, chemicals, pharmaceuticals, and cars. He has won various prizes for his cases and articles on supply chain management, outsourcing, and procurement. Thomas Vollmann is an American who has spent the past 20 years in Europe. He is Professor (Emeritus) of Manufacturing Management at IMD. His areas of special interest are manufacturing planning and control, performance measurement, supply chain management, and procurement. He is a consultant to numerous companies in manufacturing, procurement, and demand chain management, and a lecturer in executive development programs throughout the world. Professor Vollmann is the author/co-author of 12 books, over 50 case studies (8 of which have won awards), and approximately 100 journal articles. xvii