The company’s marketers should be interested in the company’s suppliers, not just its distributors and dealers. One reason is to make sure that the company’s purchasing people buy quality supplies so that the company can deliver its promised quality level to its target customers.
Another reason is that undependable suppliers can lead to production delays and therefore to broken delivery promises to customers. A third reason is that good suppliers will provide value-adding ideas to the company beyond simply supplying the product.
Although the company’s purchasing people should seek the best suppliers, they also are judged by their ability to keep company procurement costs down. This pressure can lead to compromises in the choice of suppliers.
When Ignatio Lopez ran General Motors’ procurement, he treated the suppliers harshly, always demanding a rock-bottom price even if this put some suppliers on the edge of survival. This is shortsighted. One can guess that these hard-pressed suppliers would favor the other auto companies when it came to handling shortages or unveiling innovations.
Today most companies are reducing the number of their suppliers. The thought is that one good supplier is better than three average ones. Some companies have chosen to work with a prime supplier rather than playing off suppliers against each other in the hope of gaining concessions.
The auto industry has moved toward using a prime supplier for seating, another for engines, another for braking systems, and so on. These prime suppliers are treated as partners who coinvest in the success of the customer.
And if you are supplier, be thankful when you have a demanding customer. Rolls-Royce calls Boeing “the toughest customer we have” and they’re grateful for it. By meeting the standards of a demanding customer, the company ﬁnds it much easier to satisfy their less demanding customers.