Hire your Supplier, Really !!!

First, A Supplier is an Organization committed to your success by providing you a unique product or service while a Vendor is someone who provides you with a Commodity like you street-side hot dog cart.

Second, your Suppliers sole purpose in life is not to take advantage of you. Stop being skeptical, suspicious and un-trusting of them. Embrace that if you do well then of course they will also do well.

I LOVE my Suppliers, I mean really LOVE them, so much so I am constantly wanting to hire them and have them onboard within my organization. I usually succeed with a huge universal benefit to all involved.

When I hire my Suppliers they become "Commodity Managers". On Boarding a Commodity Manager is not easy, if you think the procurement team is suspicious, wait for the reactions from within the rest of your organization. It takes time to convince folks not to be so adversarial with our Suppliers but rather embrace them as a partner, managing our Hidden Factory.

Why have a Commodity Manager?

• They know their industry.

• They know their competitors better than you and also their capabilities.

• They know their own internal Production Schedule and Constraints

• They are aware of Technical advancements being worked on in their organization.

• They are nice People and Care.

I typically target Organizations that supply me greater than 1 million dollars annually. I know every company has a Sales and Marketing budget so they can afford me. Stop sending in the Sales Person to make small talk bring me a new pen or calendar, that does nothing to enhance our product or reduce cost.

I LOVE my Commodity Managers. We embrace them as a new addition to our family. Heck, we even provide them with a place to work from including a computer, full access to all of our meetings including Production Meetings, Forecasts and yes even New Product Development. It does not stop there, we then provide them with a log-in and password to access our system, train then how our planning criteria operates and then let them loose.

Here is what we Learned ...

Accounting is terrified of our Commodity Managers, so what !! If a Commodity Manager decides to over-stock us we will quickly know and can throttles back the purchases. If the Commodity Manager decides to increase pricing within a nano-second Accounting will be in my face showing me the PPV (Purchase Price Variance) and telling me that they were right that Commodity Managers could not be trusted.

Most Important here is what we gained ....

Commodity Managers have a vested interest in their commodity so they will become like Bird Dogs hunting for a duck to find cost reduction opportunities. Since, I did not have the resources to find those kind of savings I was extremely happy to share the found savings with then 50-50.

Commodity Managers were happy promoting a product change and even helping to create the Engineering Change Notice.

Commodity Managers were an extremely valuable addition to our New Product Design Teams, since they brought us ideas in development that then allowed us to be the first to bring it to market.

Commodity Managers were embarrassed if their organization provided poor quality, especially if they had to do the sort or rework. I am certain their corrective actions carried a lot more weight than those requests coming from our procurement team.

Commodity Managers were actually more conservative with inventory levels than our ERP System would tolerate. They often shifted their planning cycle to the cadence of production within their facility.

Commodity Managers actually embraced our Cycle Counting Process, since any inventory inaccuracies would inadvertently impact them.

Commodity Managers were great at diffusing potential bad situations, they could get their Tech Support almost instantly to solve an application engineering situation, often before we were even aware we had a potential situation.

Not going to lie, Thanks to our Commodity Managers we did get preferred treatment. We always enjoyed and appreciated getting better Procurement Lead-Times than our competitors, which enables us to win many contracts.

Commodity Managers remained nice people, blended within our team and gave us a distinct advantage while reducing the stress and work of our regular Procurement Team.

For the brave, try providing Commodity Management to your key customers. It will help smooth your production, perhaps increase sales but for sure margins. We can help you design the program.

Now you know why I LOVE my Suppliers, LOVE my Commodity Managers because ultimately they are our secret competitive weapon.