15.8 End-of-Chapter Case: Supplier Integration: Is it the new flavor of the month?

Mindy Peterson sat perplexed. She was waiting for the 5:55 subway into the office. She wondered, "Is supplier integration really going to be treated as the new flavor of the month?" She really couldn't believe how her colleagues had dismissed all of her efforts to get suppliers more involved in the NPD process.

Just three months ago Mindy joined Brighton VME, a medium-sized veterinary equipment manufacturer, as a junior purchasing associate. She had just graduated from Michigan State University, one of the premier supply chain management programs in the country. She still had the "Spartans Will" mindset. In fact, that mindset landed her the job. During her interview, her boss Fredy Sanders arranged a lunch with some colleagues. He wanted to show off VME's collegial atmosphere. At lunch, Bill Mortimer, lead engineer on a cool new product development team, had talked about the great innovations VME had been able to bring to market. He also suggested that VME was now struggling to push the envelope. Mindy had suggested that deeper supplier involvement might spur more creative thinking—and help VME get products to market faster. VME had traditionally brought suppliers in during the prototyping stage of NPD. Mindy's bold suggestion won her the job! Now, she was expected to make it work.

The Supplier Integration Project

Mindy's first assignment was on Bill's NPD team. Fredy thought that maybe Bill was losing his passion. Maybe Mindy could rekindle the drive that had made him a top-notch development engineer. Bill's project was to develop a "procedure light" that would emit a very bright light for operations without distracting surgeons if they looked into it. The market potential was huge! None of VME's rivals had even attempted to tackle this problem. VME thus had an opportunity for a big win. But, VME was struggling with the key component of the light: the bulb.

Mindy's first move was to invite VME's incumbent bulb supplier, Detroit Bulb Manufacturing (DBM), to a joint meeting with the NPD team. She had wanted to introduce them to the project, and to gauge their willingness—and ability—to help. The supplier team seemed excited—and not just because VME represented a large portion of their sales. Mindy remembered that she had left that meeting feeling confident. She couldn't wait to push things along.

Easier Said Than Done

The last six weeks had evaporated. Unfortunately, the NPD team hadn't made much progress. Each new design was either too expensive or created too much heat. Worse, DBM didn't seem willing to step up to the plate with many suggestions. The few they offered were really pretty weak. "What is going on?" Mindy kept asking. Are all the success stories she heard in college the one-in-a-hundred exception—or even urban legend? Was supplier integration just another flavor-of-the-month management fad? Or, was she doing something wrong? She started doubting herself, wondering if she had over promised. The fact that Fredy had set up a status update and performance review meeting with her next week made her heart sink. Mindy decided to redouble her efforts and find out why the integration efforts weren't paying off.

Starting From Square One: DBM's Performance

DBM seemed like a great supplier. DBM had been doing business with VME for years. DBM's scorecard looked like it should hang in the supplier hall of fame. Further, DBM had always been responsive to price reductions. And DBM exceled at quality. DBM was a star in VME's supplier universe.

As Mindy talked to some of her colleagues, she discovered that tough, sometimes rancorous negotiations had preceded DBM's price reductions. Mindy remembered her on-boarding interview with Keith, the veteran purchaser whose retirement opened a spot for her. Keith had called DBM an "easy supplier." He mentioned, almost smugly, "They are so dependent on us they always give in to our demands. DBM would be toast if we switched suppliers."

Mindy asked herself, "Was DBM just excited to get involved in the NPD project because they wanted to please us? Are they worried that if they don't say ‘Yes,' that we will jump ship to a different supplier?" If this was the case, she could understand why DBM's participation seemed half-hearted. Maybe DBM is just going along to get along, giving us the bare minimum to keep us satisfied. Mindy wondered how she could address these issues and what she should do if this was the case.

A Look In The Mirror: VME's Role

Mindy knew, however, that you can't slice cheese so thinly that there is only one side. So, she reviewed the telephone transcripts of the meetings and dug through the documents that were shared back and forth between VME and DBM. She wasn't an engineer, but the information seemed to be fairly general. VME engineers in particular seemed to grudgingly share information—and in a piecemeal fashion. Mindy wondered, "What's going on? Why aren't we sharing information in an open and helpful manner? Is VME's unwillingness to share the reason DBM hadn't made any real contributions? Maybe DBM didn't really feel like part of the team." But, she asked herself, "What can I do about this?" That's when she remembered something she had learned in school. One of her professors had often borrowed a line from Jimmy Dugan, the manager in the movie, A League of Their Own, "If it were easy, everybody would do it."

Questions

  1. Why is integrating with suppliers easier said than done?

  2. How has VME's past treatment of DBM likely influenced DBM's current behavior?

  3. Why are VME engineers so reluctant to share information with DBM? Consider all of the options?

  4. What specific steps should Mindy take to improve the collaboration and creativity of the NPD team?

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