1. Purchasing And Boundary Spanning IDIS 424 Spring 2004
Chapter 5
Purchasing And Boundary Spanning IDIS 424 Spring 2004

2. Buyer-Seller Improvement Teams
Why include suppliers as part of a buyer’s improvement teams?
Research reveals that most organizations recognize the potential benefit of closer inter-organizational relationships
Research also reveals that teams that relied on supplier input and involvement (when the task warranted involvement) were more effective in their task, on average, than teams that did not involve suppliers

3. Buyer-Seller Improvement Teams
Why include suppliers as part of a buyer’s improvement teams?
Teams that include suppliers as participants report important outcomes--
Greater satisfaction concerning the quality of information exchange between the team and key suppliers
Higher reliance on suppliers to support directly the team’s goals--supplier is a resource
Fewer problems coordinating work activity between the team and key suppliers
Greater effort put forth on team assignment

4. Buyer-Seller Improvement Teams
Why include suppliers as part of a buyer’s improvement teams?
Teams that include suppliers as participants report important outcomes--
Greater supplier contribution across many performance areas
Providing cost reduction ideas
Providing quality improvement ideas
Supporting actions to improve material delivery
Offering process technology suggestions
Supporting material ordering cycle time reductions

5. Buyer-Seller Improvement Teams
Key Issues:
Who has ownership of the process?
Which suppliers should we involve?
Should involvement be ad hoc or continuous?
How can we motivate suppliers to participate?
How can we motivate internal participants?
How do we overcome the barriers associated with using teams?

6. Six Important Questions That Every Cross Functional Team (CFT) Should Ask

7. Important Questions That Every Cross Functional Team (CFT) Should Ask
Question # 1: Do we consider CFT planning Issues?
Select a meaningful task
Members should “buy-in”
Members should have
task knowledge
time availability
ability to work in a group
a “big picture” perspective
no hidden agendas
Organizational resources should be available

8. Important Questions That Every Cross Functional Team (CFT) Should Ask
Question # 2: Is top management practicing “subtle Control” over the CFT?

9. Important Questions That Every Cross Functional Team (CFT) Should Ask
Question # 3: Do we recognize and award
Overall team performance
Individual member performance
Are awards and recognition valuable

10. Important Questions That Every Cross Functional Team (CFT) Should Ask
Question # 4: Has the CFT established effective Performance Goals
Goals should be explicit
Goals should focus on end results
External pressure to establish goals usually results in setting difficult goals
Teams, in general, tend to set more difficult goals

11. Important Questions That Every Cross Functional Team (CFT) Should Ask
Question # 5: Are Key Suppliers and Customers part of the CFT?

12. Important Questions That Every Cross Functional Team (CFT) Should Ask
Question # 6: Does the CFT Have the Ability to Self-diagnose the quality of its interaction and performance?

13. Key Drivers Cycle Time and Cost Reduction Customer Rapid Expectations
Technological
Change
SUPPLIER INTEGRATION
INTO
NEW PRODUCT
DEVELOPMENT
Quality and
Reliability
Improvements
Core
Competency
Focus
Shortened
Product
Life Cycles
Global
Competition
Corporate
Downsizing

14. Product Development Process1 2 3 4 5
Business/
Idea
Technical
Concept
Engineering
Prototype/
Full Scale
Operations
Generation
Assessment
Development
and Design
Ramp-Up
(Preliminary)
Possible Supplier Integration Points

15. Why Suppliers Aren’t Used in New Product Development
“Not Invented Here” syndrome
Supplier concern over proprietary cost information
Buying company concern over proprietary cost information
Time required to identify and integrate a supplier
Buying company concern over proprietary technology
Lack of processes for integrating suppliers

16. Increasing Supplier Responsibility
SPECTRUM OF SUPPLIER INTEGRATION
None
“White Box”
“Gray Box”
“Black Box”
No supplier
involvement.
Supplier
“makes to print.”
Informal supplier
integration.
Buyer “consults”
with supplier
on buyer’s design.
Formalized supplier
integration. Joint
development
activity between
buyer and
supplier.
Design is
primarily
supplier driven,
based on buyer’s
performance
specifications.
Increasing Supplier Responsibility

17. SUPPLIER INTEGRATION PROCESS
Establish
internal core
competencies
& capabilities 1 2 3
Select
supplier(s)
& build
relationships
Align
objectives &
technology
roadmaps 4
Establish
new product
requirements 5
Jointly
establish clear
metrics &
targets 6 7 8
Share
information
openly &
extensively
Give
supplier(s) an
active role
Monitor
& learn from
experience

18. METRICS AND TARGETS DEVELOPMENT EFFORT MUST BE TARGET-DRIVEN, WITH
WELL-DEFINED AND AGREED-TO TARGETS
Market-based targets
Clearly defined performance metrics and targets
Cost
Development schedule
Product performance (weight, size, speed, etc.)
Supplier input/buy-in
Critical with a less-familiar supplier

19. INFORMATION SHARING
EFFECTIVE COMMUNICATION AND INFORMATION SHARING IS CRITICAL
Confidentiality, non-disclosure agreements
Trust development
Direct function-to-function cross-company communication
Open sharing of information
Customer requirements information
Cost information
Technology roadmaps
Linked information systems

20. INSTITUTIONAL LEARNING
SUPPLIER INTEGRATION IS A DIFFICULT PROCESS THAT
MAY NOT GO RIGHT THE FIRST TIME
Post-project review/audit
Include supplier in evaluation
Sharing of lessons learned
Continuous improvement orientation