1. Copyright (c) 1997 - 2003, Michael Arthur Johnson Mutually Beneficial Supplier Relationships

2. Copyright (c) 1997 - 2003, Michael Arthur Johnson What kind of relationship do you want ? Friend ?Foe ?

3. Copyright (c) 1997 - 2003, Michael Arthur Johnson Welcome your speakers Mike Johnson mike@redbead.com

4. Copyright (c) 1997 - 2003, Michael Arthur Johnson Make more Profit ? The best way to manage your organization Getting to root cause ! Get new business from new customers Keep old business from old customers Have less rework & waste in your office or shop Stop customers from changing their mind Have happier employees Have happier customers Go home with a smile on your face Enjoy your weekends Copyright (c) 1997 - 2003, Michael Arthur Johnson

5. How do you look for a Global Supplier ?

6. Copyright (c) 1997 - 2003, Michael Arthur Johnson Everyone's talking about it... but... What do you consider ?

7. Copyright (c) 1997 - 2003, Michael Arthur Johnson Agenda Introduction of topic Global Guiding Principles Outline critical success factors Define terms - What is World Class? Tenants of success...working through World Class Suppliers Key business strategies of Suppliers Finding the "right type of behavior" Beyond TQM... use Innovation Rework, Waste and Changes in Mind

8. Copyright (c) 1997 - 2003, Michael Arthur Johnson Not covered How to outsource Why to outsource How to select an outsourcing supplier How to protect or place your people

9. Copyright (c) 1997 - 2003, Michael Arthur Johnson You are our customer ! What do you expect from me?

10. Copyright (c) 1997 - 2003, Michael Arthur Johnson Agenda Introduction of topic Global Guiding Principles Outline critical success factors Define terms - What is World Class? Tenants of success...working through World Class Suppliers Key business strategies of Suppliers Finding the "right type of behavior" Beyond TQM... use Innovation Rework, Waste and Changes in Mind

11. Copyright (c) 1997 - 2003, Michael Arthur Johnson Global Guiding Principles Mgt. Culture Manage results Process knowledg e Local Mgt. Support local/home Banking knowledg e Values Local Culture

12. Copyright (c) 1997 - 2003, Michael Arthur Johnson Is there a missing piece ? Standards of performance

13. Copyright (c) 1997 - 2003, Michael Arthur Johnson Who's standards ? Local Industry Your company American ?

14. Copyright (c) 1997 - 2003, Michael Arthur Johnson What makes one "World Class" and someone else not ? One that displays Mutual understanding of your/their needs Allows dependency with you Ability to increase capabilities Looks for broader business opportunities Provides for improved shareholder value Alignment of their goals and culture

15. Copyright (c) 1997 - 2003, Michael Arthur Johnson What makes one "World Class" and someone else not ? They leverage People Expertise Investments Assets Ongoing investments Innovation Work anywhere in the world

16. Copyright (c) 1997 - 2003, Michael Arthur Johnson What makes one "World Class" and someone else not ? With behavior that C ustomer satisfaction and process oriented Supportive - positive - motivating Look for "win-win" outcomes Try to seek solutions - focused on results Not to find or place blame with people Nurture innovation Provide for confidentiality of information Commitment to learning

17. Copyright (c) 1997 - 2003, Michael Arthur Johnson Critical success factors Clear understanding of what relationship means Culture adopted by supplier Commitment / support from top management in both organizations No secrets Understanding of key business strategies Strong working knowledge of project management Exhibit the "right" types of behavior

18. Copyright (c) 1997 - 2003, Michael Arthur Johnson Expect the same of your supplier as your best employee Technology: Expect new and better methods Quality: Measure the consistency overtime Responsiveness: Expect quick response to need Delivery: Expect consistency of service Cost: Look at total cost of ownership Environmental: Expect programs to protect Minority: Implement programs to employ

19. Copyright (c) 1997 - 2003, Michael Arthur Johnson Mutual management culture overlap Is the established set of principles upon which two organizations of people operate Theses principles are manifested in a certain pattern of behaviors These behaviors characterize what it is the organization stands for and how those who interact with it can expect to be treated

20. Copyright (c) 1997 - 2003, Michael Arthur Johnson Shared values between companies Must be shared not just joint development Must include Integrity Importance of Business Controls Allow for synergy to develop Evolution of shared competencies

21. Copyright (c) 1997 - 2003, Michael Arthur Johnson Must have an understanding of local norms "When in Rome, do as the Romans do..." Consider a "good" local partner to get started Invest in the local economy Be a good citizen Contribute to the local culture Must be able to operate locally and integrate with access to people, information and knowledge Working knowledge of local markets

22. Copyright (c) 1997 - 2003, Michael Arthur Johnson Management presence local vs. expatriate Use of local management recommended Business controls are important Use expatriate to train is acceptable Become part of the local community Use local partner to start - not long-term Contribute to the local economy - add value Develop local identity Make local investments Think long-term - investments will payoff overtime

23. Copyright (c) 1997 - 2003, Michael Arthur Johnson Support structure local/regional/home office Local support preferred Combination of local and regional is acceptable Home office support will be difficult due to local/regional culture differences and subtleties

24. Copyright (c) 1997 - 2003, Michael Arthur Johnson Regulations Stability of currency exchange How are you going to get paid How are you going to take funds out Barter or trade Tax incentives Stability Integrity Relationship with local banking system € LVL - LS

25. Copyright (c) 1997 - 2003, Michael Arthur Johnson Process knowledge Have direct experience in your field Demonstrated expert in your field Ability to communicate with your experts Knowledge to train and develop local workforce Established procedures, systems and programs

26. Copyright (c) 1997 - 2003, Michael Arthur Johnson Manage for results Define clear expectations and measures Collect data - repeat regularly Make decisions from the data not emotion Obtain consensus on attributes T - Technology Q - Quality R - Responsiveness D - Consistency of delivery C - Cost of ownership overtime E - Environmental concerns

27. Copyright (c) 1997 - 2003, Michael Arthur Johnson Successful communication Listen first – talk second Be an active listener at all times Articulate clearly & logically Convey enthusiasm Engage the other person Ask probing questions to make sure they understand Open ended vs close ended questions (yes or no) Establish a clear and measurable expectation for results

28. Copyright (c) 1997 - 2003, Michael Arthur Johnson Profound changes Create better management systems Attitudes & beliefs - home, work Method / system in which we work Way we manage people Design of work processes Environment in which we work Methods used to solve problems

29. Copyright (c) 1997 - 2003, Michael Arthur Johnson Eliminate common causes  The Sum Of:  Tasks x hours x $ rate  Rework Costs (procedures & training)  Wasted tasks (consistent planning)  Changes in mind (specifications) Total costs are

30. Copyright (c) 1997 - 2003, Michael Arthur Johnson Eliminate common causes  The Sum Of:  Tasks x hours x $ rate  Rework Costs (procedures & training)  Wasted tasks (consistent planning)  Changes in mind (specifications) Total costs are

31. Copyright (c) 1997 - 2003, Michael Arthur Johnson Eliminate common causes  The Sum Of:  Tasks x hours x $ rate  Rework Costs (procedures & training)  Wasted tasks (consistent planning)  Changes in mind (specifications) Total costs are

32. Copyright (c) 1997 - 2003, Michael Arthur Johnson Eliminate common causes  The Sum Of:  Tasks x hours x $ rate  Rework Costs (procedures & training)  Wasted tasks (consistent planning)  Changes in mind (specifications) Total costs are

33. Copyright (c) 1997 - 2003, Michael Arthur Johnson Influence others Motivate others Provide direction Be results oriented Take risks Encourage others to take risks Foster teamwork Be an excellent communicator Learn – from success and failure Demonstrate Leadership Skills

34. Copyright (c) 1997 - 2003, Michael Arthur Johnson Final thoughts Outstanding suppliers are "made" not found Fewer suppliers requires strategic selection criteria Sourcing is a key strategic activity If all you get for your purchase dollar, is parts / services,... then you lose!

35. Copyright (c) 1997 - 2003, Michael Arthur Johnson Relationships take a lot of time and effort to build... You can never guarantee the future - the difference is we know what to expect... but can be lost overnight

36. Copyright (c) 1997 - 2003, Michael Arthur Johnson Relationships take a lot of time and effort to build... The importance of cultural fit - shouldn't be under estimated... but can be lost overnight

37. Copyright (c) 1997 - 2003, Michael Arthur Johnson Supplier characteristics VENDORPREFERREDPARTNERALLIANCE Closed Book Little product differential S.T. arrangement Contract driven Lowest price focus Some trust earned Some differential Longer term Quality process Cost & Quality focus Begin to focus on total value Open book High trust Win/win Top management exchange Continuous improvement Focus on significant added value Process re-engineering Mutual understanding Mutual dependency Increased capabilities Broader business opportunities Improved share holder value Compatible goals

38. Copyright (c) 1997 - 2003, Michael Arthur Johnson Value High supcfm.03 SUPPLIER RELATIONSHIPS - When do they apply? High Supply Risk Low Partner Preferred Vendor Preferred Alliance Partner Strategic Leverage Restrictive Non-critical Key Implication Preferred Partner

39. Copyright (c) 1997 - 2003, Michael Arthur Johnson Relationships take a lot of time and effort to build... We are better able to control our destiny because we clearly understand what is expected and we know as much as the other if something goes wrong.... but can be lost overnight

40. Copyright (c) 1997 - 2003, Michael Arthur Johnson Relationships take a lot of time and effort to build... If it is over and one needs to leave, we will do so with our heads held high - in fact, we will tell the other before they need to tell us... but can be lost overnight

41. Copyright (c) 1997 - 2003, Michael Arthur Johnson Relationships take a lot of time and effort to build... Open relationships are easier to manage - no hidden agendas... but can be lost overnight

42. Copyright (c) 1997 - 2003, Michael Arthur Johnson Make more Profit ? The best way to manage your organization Getting to root cause ! Get new business from new customers Keep old business from old customers Have less rework & waste in your office or shop Stop customers from changing their mind Have happier employees Have happier customers Go home with a smile on your face Enjoy your weekends Copyright (c) 1997 - 2003, Michael Arthur Johnson

43. Have faith in what you believe in Have Strength & Conviction Copyright (c) 1997 - 2003, Michael Arthur Johnson Have conviction to take action on what is correct Have strength to follow through to cause effective action you will achieve success

44. Copyright (c) 1997 - 2003, Michael Arthur Johnson Welcome your speakers Mike Johnson mike@redbead.com

45. Copyright (c) 1997 - 2003, Michael Arthur Johnson Thank you Global Guiding Principles Mike Johnson

46. Copyright (c) 1997 - 2003, Michael Arthur Johnson Thank you Global Guiding Principles Ann Margaret Vann & Mike Johnson