Suppliers in the Solution Economy are NOT Suppliers in the Industrial Economy

Given that, in today’s Solution Economy, a company that suppliers a customer with a product or service often outsources the production of that product, or the implementation of the service, to a third party, the company needs to thoroughly understand its suppliers’ strengths and weaknesses to select the right supplier to manufacture that product or provide the service to the end consumer.

This means that, where its suppliers are concerned, a company needs to have a much better understanding of its suppliers than it did in the industrial economy. This means that a company has to start by:

  • Asking different questions, much more often
  • Observing the supplier directly

The questions need to move away from “do you have the facilities to make this product” to “what value-add do you add in the term of usability, reliability, or warranty support that we can use to meet the needs and want of our customers” and the questions have to be asked every time the customer needs change, not just once every three years when the category is resourced. You may not be able to change suppliers or alter the contract, but if you put in continual improvement and collaborative design clauses, you can at least make sure that subsequent iterations improve in the right direction. Similarly, on the service front, the focus should move from “do you provide service X” to “give us examples of how your delivery of service X met the following customer values and led to higher satisfaction ratings”.

Similarly, it’s not enough to just do a plant visit during the supplier qualification phase. There needs to be continual observation and interaction through the full contract life-cycle to make sure that the supplier undertakes continual improvement efforts, that issues are quickly identified and brought to your attention if they can not be quickly resolved, and that the level of professionalism and attention paid to you does not decrease over time as new customers enter the pipeline.

In other words, it’s not just send out an RFQ, select a supplier, have the product shipped to the end consumer … it’s make sure it’s the right product that meet’s the consumers needs and gets there at the right time with the right level of usability and reliability.