Much has been written, including by me, about improving supplier performance. In fact, I’ve written a lot about how a customer can enable and motivate rather than discourage and even prevent performance excellence. But an area that is rarely discussed is supplier performance demotivators. What do customers do to deflate and/or discourage supplier efforts? Many of these issues are embedded in a customer’s culture. Others are due to a lack of awareness. Some are due to a pure lack of operational effectiveness. In this post, I’ll describe 6 ways to demotivate suppliers that can cause performance problems and are a hidden added cost. Sometimes in the pursuit of saving money, firms end up wasting time and money.
- Less than optimal customer business processes can adversely impact supplier performance. Less than supplier lead time orders, difficult and inefficient procure-to-pay processes, and asking suppliers to carry inventory for customers are a few examples.
- Unclear expectations. These can come from flavor of the month initiatives at the customer that keep suppliers guessing about what’s next and has them lying low till the latest initiative blows over. If suppliers are not sure about how they’ll be evaluated and what the impact will be, then meeting amorphous or unknown requirements can result in supplier confusion and in tuning out the customer. Or, sometimes customer expectations are unclear because the customer has never defined or communicated them.
- Hypocrisy. An example of customer hypocrisy is telling suppliers that they want to be partners, but treating suppliers disrespectfully and as the lesser party in the so-called partnership. Or, purporting to care about total cost and best value when customer actions indicate the focus is entirely on price.
- Do as we say, not as we do. Some customers hold their suppliers to a higher performance standard than they hold themselves to. They may talk about the necessity of suppliers becoming lean, yet behave as if lean is a concept for suppliers not for them, actually making it harder for suppliers to adopt lean and turning them off in the process.
- Discouraging supplier ideas. Some customers ask suppliers for ideas, but are in fact not open to them. Suppliers are good at figuring out whether or not a customer really wants to hear their ideas. Even when ideas are sought, they may be met with NIH (not invented here) or “we tried that”. Another example is not taking a supplier suggestion to loosen up the spec because the engineering department is striving for the perfect specification, not for meeting customer requirements, which may not need to be so stringent (and so expensive).
- Lack of communication or poor communication. Communication problems within a customer firm can get reflected in the way they treat suppliers. Mushroom management as a control mechanism works internally for some managers, so why not manage suppliers like mushrooms too. Some customers think that playing close to the vest and keeping suppliers guessing keeps them on edge and sharper. Controlling rather than sharing of information with suppliers gives them less to go on and can prevent suppliers from doing a good job.
These are just a few of the ways to demotivate suppliers. I’m sure you can think of many more.