I enjoyed this recent article over on Supply Management . com on how when you know the score, like Masco, and use collaborative two-way scorecards (like Canada Post does), you can save a lot of money. Masco saved over $5M with its pilot project with just one supplier, exceeding their initial savings goal by over 40%. And that’s just the tip of the iceberg. When they roll the program out to their other strategic and high-volume suppliers, I’m sure they’ll save 10 to 100 times that.
Although it’s hard to measure, and even harder to define, true collaboration — where both parties commit to continuous improvement — works. And it generates significant returns when both parties work together and merge their strengths, knowledge, and experience pools. This is because, as the article points out, good collaborative two-way scorecards will:
- Put the strengths of your purchasing professionals to use
- Leverage suppliers with whom you do significant business
- Transfer technical expertise from suppliers to you and vice versa
- Focus on win-win opportunities that engage both parties
- Allow both parties to honestly evaluate operations and identify areas for improvements and realistic targets
For more on Masco’s Score methodology (formally labeled their Supplier Collaborative Cost Reduction Evaluation initiative), see the article. It also has their five steps to success, which, though high level, are pretty good.