Over the past 5 years I have heard many vendors and clients talk about partnerships and that the real value of being a partner is in the ability to help the client innovate.
The challenge though is that in today’s buying/procurement model, when you bring an innovation to a client it is often then shopped around. I remember having many conversations with Procurement Managers who would actually say this to you and then you would respond "what about my IP … what about our partnership to innovate".
Innovation truely is the key to a partnership as the vendor often brings insights that only occur from their vantage point. I have also seen it the other way around, where in a conversation or the way a client brings up a problem helps the vendor innovate.
In initial research on this topic I ran across a Podcast by John Seely Brown from the SuperNova 2005 conference. He brings up some interesting points and points of view around the difference in supplier/partner methods by Japan automotive manufacturers versus Detroit automotive manufacturers. I can not do justice to the way he discusses it so here is a link to his Podcast, but first I will highlight a couple of points:
- Modulated System – Cost View
- Long-term relationship with vendors who push back at each level with productive friction, to look at innovation in product improvement and cost reduction.
- Client can walk through supplier and nail down an understanding of their cost and ideas on how to improve it.
- Top-Down System – Price focus
- Supplier dis-encented to provide feedback as it will be shopped around
- Lowest price on widget not on right solution
- Creation of Ecosystems
- not supply chain only
There are many other items in regards to offshoring for various industries based on more than price arbitrage. So take a listen, I will also endeavour to get an interview with John more focused on our topics. John Seely Brown @ SuperNova 2005
I listened to the podcast and his comments are particularly relevant with the news of GM being in trouble. He mentions Toyota as an outstanding example of how to innovate with suppliers. I expect GM’s approach is “my way or the highway. We own all your ideas.” The difficulty is how to protect the innovative ideas of a supplier in the process. I expect there needs to be an agreement between the parties to keep approaches confidential. However many companies are very relucant to do that or do not consider the issue. Whatever happened to business ethics, revealing a unique and creative approach to the competition really does not seem very ethical.
I think being open to new approaches and new ideas wherever they come from is a key yo survival in the fast changing world.