Tips on dealing with business storms before they hit
This is not a step that is appropriate in every supplier-customer relationship, but it certainly is appropriate in instances in which the supplier’s contributions go beyond simply delivering a product that meets spec’s on time. In this instance, there was agreement that the relationship had been one of a strategic supplier and a strategic customer. It was a failure on both organizations’ part that they did not invest in processes and discussions to ensure that the contributions that were strategic were jointly recognized and appropriately reflected in decisions about the relationship.
Bridging the troubled waters that can separate suppliers and customers begins with consistent views as to what factors contribute to value creation. Many horror stories that we have heard about failed supplier-customer relationships have boiled down to the two organizations making different calculations, reflecting different beliefs as to what elements enter into value creation. And, as this case example suggests, once this problem surfaces, it can quickly turn into the business equivalent of Class 6 rapids in which the relationship is quickly swept away.
Formally engaging in supplier-customer discussions as to what creates value is not an easy process, especially when everything seems to be going well, but it is far easier than losing a valued customer or a valued supplier because the discussion didn’t take place and the storm hit. Best-in-class organizations, on both sides of supplier-customer relationships, must take the steps to create a dialogue to ensure that both firms understand the other and to form the basis for an effective information and communications flow that establishes the foundations for shared successes. The firms that do so are well-positioned for success, with outcomes far more likely to be translated into bottom-line rewards for their shareholders.
George Brown, Jr., along with Atlee Valentine Pope, is the author of “CoDestiny: Overcome Your Growth Challenges by Helping Your Customers Overcome Theirs,” published by Greenleaf Book Group Press of Austin, Texas. See www.CoDestinyBook.com for more details. He is also the CEO and cofounder of Blue Canyon Partners, a strategy consulting firm working with leading business suppliers on growth strategy.