Page 132 - Harnessing the Management Secrets of Disney in Your Company

Share the Spotlight 113

product standards. In effect, the vendor’s performance was constantly tested
against a set of standards designed to conform to the needs of the customer.
Moreover, one vendor was leveraged against another because organiza-
tions insisted on having two or three sources for the same item. Often a
vendor was required to reduce prices to remain competitive, regardless of
the impact on the vendor’s organization. The rationale for the price cuts lay
in the expectation that the vendor should constantly be improving processes
and sharing the resultant savings with the customer.
While certification streamlined the buying process, strategic direction
was developed without vendor input. Thus, little was done to improve the
competitive position of either the customer or the supplier.
In contrast, true partnerships envision working with vendors to develop
compatible cultures. If sole-source relationships are developed, win-win per-
formance measures can be devised that take into consideration the needs of
both parties. In addition, sole-source relationships encourage process integra-
tion and the cross-company sharing of results. Vendors can more readily be
included in strategic planning. The end result is an efficient and productive
alliance for both suppliers and customers. Indeed, the term partnership pre-
supposes the willingness not only to share the spotlight but also to work out
in a straightforward fashion what is best for both parties. Sometimes these
arrangements aren’t bound by legal contracts and actually bear more of a
resemblance to the kind of teamwork we discussed in the preceding chapter.
One of our clients, for example, established an innovative and productive
relationship with the company that supplies its packaging. Constant prob-
lems and the words “This isn’t working” marked the association between
the two companies before they decided to set up an informal partnership.
Now, teams comprising staff members from each company consult with one
another about a variety of issues: the design of the packaging so that it meets
precise specifications, the costs involved, the materials to be used, and so
forth. Engineers, purchasing agents, and managers from each company now
meet regularly to discuss their respective needs. The two companies work so
closely together that some of the packaging-supply people have desks at our
client’s offices, and a new computer network keeps everyone informed of
progress on issues of mutual interest.
To confirm that it was on the right track with this informal arrangement,
our client compared the costs of using traditional purchasing methods against
the costs of its new method. The new procedure won hands down, and it is
producing substantial cost savings. Equally gratifying, this collaboration has