409
Epilogue
This book is essentially about how to achieve excellence in customer–
supplier relationships. It is not about excellence in manufacturing or ser-
vice, but achieving excellence in the entire organization for both customer
and supplier. Organizations must realize and implement a win–win rela-
tionship for a lifetime relationship. This means that the relationship of
excellence is measured in loyalty and respect to each other, and repeat
business. In this relationship, quality is important; however, this quality
must be at all levels of the organization. After all, quality is achieved when
customers return but products do not! This means in the simplest denition
that quality is about survival in the future among competitors. So, what
sets an organization apart?
We hope that we have demonstrated throughout this book that quality is
not about standards, measurement, special characteristics, or special tech-
niques. Of course, these are important, but most important are the commit-
ment to process excellence and an overall desire to do more than just deliver
conformance to requirements or products/services that are t for use.
The start of differentiation begins with a awless launch. To have a suc-
cessful launch for any product and/or service, both the organization and the
supplier must have focus and determination for a mutual engagement that
delivers supplier components/systems on time with correct designs, proven
performance, best-in-class quality, competitive cost, and required capacity.
This means that a simple model must be followed consistently with the fol-
lowing ve characteristics:
1. Planning
2. Implementation
3. Measurement
4. Improvement
5. Recognition and award
In practice, these ve characteristics may be summarized as
• Early involvement: Work with suppliers more consistently, earlier in
the product development process
• Teams: Utilize cross-functional teams to work together with suppli-
ers at their facilities
• Standardization: Adopt a single, global, disciplined process to mini-
mize rework and redundancy
410 Epilogue
• Governance and reporting: Use common, clear deliverables and a
structured management review cadence
• Priority: Have a system that prioritizes the needs for an intervention
based on criticality, delivery, performance, capacity, or some other
factor
An excellent example of these ve characteristics is the relationship
between Ford Motor Company and two of their suppliers for the 2015 model
of the F-150 truck. The rst is the Alcoa Company, which provides alumi-
num for the truck body, and the second one is OSRAM Automotive Lighting,
which provides a complete LED forward lighting system.
The relationship of both customer and suppliers in this case demonstrates
the growth in quality perception, which is summarized in TableE.1.
Alcoa and OSRAM were committed to satisfying the customer, and they
both demonstrated this commitment through four key principles.
1. Quality: We all know how much consumers rely on the products
they buy to make their lives easier and more comfortable, so both
suppliers pushed themselves to make cars lighter, last longer (alu-
minum), and perform better (lighting system).
2. Safety: Everyone knows that as long as human beings design any-
thing, there is going to be a failure because nothing is perfect and
absolute. In fact, from a reliability perspective, we know this from
the R(t)=1–F(t) [reliability at time t is equal to 1 minus the failure
rate]. Therefore, the focus was to produce products that assure the
customers were indeed buying a product that met and/or exceeded
the requirements of safety and that the new innovations were part
of the philosophy of continual improvement in both cost and safety.
3. Support and satisfaction: Both customer and suppliers worked
together in educating each other about the new innovation to opti-
mize product performance and value to consumers.
4. Innovation: Although aluminum usage in the automotive industry
is not new, it is the rst truck that has annual sales greater than any
other vehicle on the market to be made of anything other than steel.
The old model worked so well that the F-150 has been awarded the
Number 1 status in its category for many years. However, the Ford
management was not satised with that. They wanted to improve.
So, they introduced the concept of aluminum and LED technology.
Indeed, the F-150 for the 2015 model year will incorporate both of
these innovations. The aluminum will contribute to reduction of
weight, thereby increasing fuel efciency (miles per gallon) and
the LED technology will contribute to much greater safety for
the high/low beam, light driver module, turn module, and park
module.
411Epilogue
The Five Critical Items for the Customer
It all starts with customer needs and wants. After all, if there is no customer,
there is no need for a supplier. We emphasize the word supplier because unless
the relationship between customer and supplier is based on a win–win phi-
losophy, neither one will prosper. This win–win philosophy is based on a
long-term relationship and is the complete opposite of the vendor concept,
TABLEE.1
Summary of Growth in Quality Perception
Old Approach New Approach
Quality services • Service quality and
performance
• Customer satisfaction
• Service quality applications
• Service management principles
• Customer choices
• Service failures and guarantees
• e-service
Quality
management
• Theory building
• Cost of quality
• Total quality management
(TQM)
• Infrastructure element
• Externalities
• Global issues
• Usage of models
• Context and contingencies
• Global contingencies
• Six Sigma
• Supply chain quality
• Environmental concerns
Quality product • Design based on attributes
and performance
• Product strategy
• Process strategy
• Strategic product choices
• New product introductions
Quality process • Project management
• Process models
• Improvement models based on
data
• Use statistics for optimization
Quality
performance
• Quality practices
• Quality awards
• TQM and performance
• Accountability and
measurement
• Supply chain development
• Usage of information
technology
• Focus on strategic benets
Quality practice • Theoretical models
• Change management
• Baldrige practices
• Learning contingencies
• Build on knowledge
management (things learned—
corporate knowledge)
• Accumulating knowledge
(historical TGW and TGR)
• Baldrige practices
• SPC
• Six Sigma
• ISO standards
• Lean practices
412 Epilogue
which is based on a short-term relationship and strictly price. Therefore, in
order for the customers to receive what they need and want, the following
ve critical items must be understood and implemented for a awless launch
of their product or service.
1. Develop a formal enterprise risk: This means that it is the customer’s
responsibility to identify supply chain risk and plan accordingly.
2. Evaluate the supplier base for vulnerability and risk exposure: Based
on the results of the development of a formal enterprise risk, it is the
customer’s responsibility to analyze the individual supplier for its
ability to perform to the needed requirements. Special consideration
should be given to historical performance, capability, and capacity.
3. Evaluate logistical issues: It is profoundly important for the cus-
tomer to make sure that logistics will not interfere with delivery of
the product and/or service. Issues of concerns here may be availabil-
ity of utilities, qualied employee pool, proximity to the facility of
the customer, transportation issues (availability of rail, airports, and
highway system), and so on.
4. Develop a contingency plan: Things happen and sometimes the
results are devastating. Therefore, it is the customer’s responsibility
to develop contingency plans in case of emergencies, such as acts of
God, power failures, employee strikes, sudden increases in demand
for the product or service, and so on.
5. Develop a symbiotic relationship in the name of continual improve-
ment (CI) and win–win philosophy: Quite often, the supplier may
need help in nancing to support its business and/or develop its
business with new innovations. The customer should have planned
for such occasions and be prepared to help. (In the case of the F-150,
Ford helped the suppliers in the development of both grants and
research.) In addition to direct help, the customer may want to
encourage the supplier to pursue innovation and implementation of
newer technologies. This is what supplier development is all about.
The 10 Indicators for a Responsible Supplier
No one will deny that suppliers are a key component to every customer’s
success. After all, they are an integral part of the customer’s quality, cost, and
ultimate consumer satisfaction. Therefore, due to the signicance of their
contribution, we have identied some key indicators for a supplier who has
the potential of being an excellent partner in the customer-supplier relation-
ship. The indicators are
413Epilogue
1. Does it meet the standards and specic requirements?
2. Will it make it difcult for us to create more and better quality
products/services?
3. Does it use accounting tricks to mask more realistic spending or rev-
enue gures (scrap, rework, capacity, etc.)?
4. Does it increase the price of the product/service?
5. Does it increase the cost of doing business with this particular
organization?
6. Does it increase the cost of doing business directly or due to heavy
regulations/specications or policies?
7. Does it secure the safety and sustainability attitude in what they do?
8. Does it support CI for its own improvement or is it viewed as a
requirement of the customer?
9. Is the entire organization on board with the concept of continual
improvement?
10. Are the policies and procedures in tandem with the philosophy of
the customer?
We believe these 10 items will signal to a customer whether the supplier
is committed to improvement for its own sake and whether it is willing to
perform on the path of excellence.
An analysis of the 10 items will conrm early on in the selection process
the attitude of the management and the future relationship. Specically,
a cursory overview of these items will lead to a deeper discussion of the
following:
• Financial numbers: Is the supplier nancially sound to under-
take the responsibility of supplying products and services to the
customer?
• Commitment to the customer: Is the supplier committed to CI for all
that it does for the customer? Does the supplier have enough capac-
ity to satisfy the customer’s needs?
• Measurement ability: Does the supplier have the ability to conrm
the performance needed by the customer? How are the key perfor-
mance indicators (KPI) identied? Measured? Recorded? Are they
relevant to the customer needs? Are they actionable?
• Plans and priorities: Does the supplier have plans for CI? How are
priorities set? Are the plans and priorities reviewed on a regular
basis for changes and/or adjustments?
• Management plans: Does the supplier cascade the plans and priori-
ties to the appropriate level for action? Does management review the
quality operating system (QOS) on a monthly basis?
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