In a recent workshop with a client’s supply chain executives, we were discussing the attributes of a best-in-class customer. In that context, I described an interview I had conducted a number of years ago in which an executive provided her definition of a best-in-class customer. The response started off humorously, but evolved to provide some sharp insights, the first of which triggered an active debate among the workshop’s participants:
“Big orders, reasonable prices, quick payments – those things are obvious,” said one, “but in a broader context I think of three things. First is the information flow, the communications between the two firms. My best customers tell me what I need to know in order to be successful. They share their forecasts, their plans, their headaches, etc. They don’t keep us guessing, and as a result we have a chance to be successful.”
The workshop participants became vocal in their attempts to turn the responsibility for information flow and communications into the hands of the supplier. They argued that most large firms today have strong, professional supply chain organizations, with multiple processes designed to attract the best suppliers and motivate strong contributions from them. They cited the quality and detail in their requests for proposals, the spectrum of information included within them about what they wanted to buy, and how they would judge suppliers.
They described the agenda items included in recent supplier forums. They talked about close-in interactions with major suppliers, often involving executive-level exchanges and visits to the facilities of both firms that were relevant to the relationship. One individual provided a very passionate summary, saying, “if there is information that our suppliers need that we aren’t providing, it’s because we don’t know about it. It’s their job to ask us, not our job to guess what else they need.”
I have long believed that proactive questioning is a key ingredient in business relationships; especially in significant, strategic relationships between suppliers and customers, asking questions is a key way through which suppliers can avoid the surprises that can disrupt even a long-standing relationship.
Economist Paul Samuelson once said, “good questions outrank easy answers”. Building upon that statement, the trick for most businesses is that of coming up with “good questions”, and I agree with the workshop participants that doing so is an ongoing responsibility that a best-in-class supplier must shoulder.
Over and over, research into best-in-class business relationships reveals that one of their key characteristics is a focus on the future. That fact provides a starting point for identifying good questions. One of the most obvious good questions involves asking “What do you see as changing in the next several years?”
Not every change planned by customers is likely to be revealed to even their strongest suppliers, for various reasons, but I’ve heard answers to that question that have been central in enabling a supplier to continue or even enhance the level of value they deliver to their customer.
One distributor’s answer included mention of plans to expand its private label to another product line, opening up a discussion with the supplier that asked the question that eventually resulted in their gaining the manufacturing contract for that product line.
An answer provided by a contractor about plans for moving to factory-assembled products to replace on-site construction allowed the firm asking the question to deliver pre-kitted products to that contractor’s new assembly site.
Best-in-class customers work hard to provide high-quality information to their suppliers and create an environment in which effective communication is possible; but suppliers must also shoulder the responsibility to ask good questions, thinking hard about what they don’t know that might enable them to do a better job and strengthen their contributions to their customers. Those that do so will occasionally find that their good questions enabled easy answers from their customers, ones that defined the path to future shared successes.
This and other case studies are presented in Best-in-Class Behaviors in Business-to-Business Relationships, by George F. Brown, Jr. and Atlee Valentine Pope, Blue Canyon Partners, Inc., © 2006. This article can be downloaded in .pdf format from the Publications page of www.bluecanyonpartners.com .
See the case study in George F. Brown, Jr., Troubled Waters, Industrial Supply, May/June 2011.