Strategic Supplier Development in Manufacturing

Strategic supplier development – raising the bar in manufacturing
 
MBN USA staff report

How do the small become mighty in a world being changed by globalization and the demands of the multinational corporations competing in it? For the minority, small and midsize manufacturer, the National Minority Manufacturing Institute has the answer through its Community of Practice called the Corporate Mentoring Program, a resource for corporations to develop MSMMs as Strategic Suppliers in global supply chains.

“Small and midsize manufacturers (SMMs) are the driving force in the world economy,” said David Burton, founder and president of NMMI. The National
Association of Manufacturers highlights the strategic significance of MSMMs in its “Annual Report of Manufacturers” that indicates that in the United States alone, small and midsize manufacturers employ more than half of all workers, generate two-thirds of all new private-sector jobs and produce more than half of the country’s total economic output. Burton contends, “SMMs have proven to be inventive, adaptable and receptive to customers’ needs. However, despite their ingenuity and determination most SMMs — and especially minority SMMs — operate with fewer resources while the global economy is challenging them to operate at value-added levels with the same, if not more agility than their much larger corporate customer.”

“For certain, globalization has changed manufacturing forever,” Burton said. “Some corporations are being viewed as lessening or even abandoning their support of domestic suppliers, including the MSMMs, in lieu of focusing on cost-saving international supply base expansion.”   
  
Burton went on to say that “… in reality, product life cycles are shrinking, consumer demographics are shifting, consumers are behaving less predictably, and economic events ripple through markets very quickly. For survival, corporations competing globally must be prepared to react to — and preferably predict — change.” He said, “Their failure to do so can result in costly write-offs, stock-outs and loss of market share.”

Burton said that “since suppliers are expected to bear the brunt of cost reductions and innovation while increasing product quality and capacity levels in this turbulent environment, their survival demands new approaches, new tools, stakeholder collaboration and new resources. For their survival, corporations’ selection of suppliers becomes a strategic decision based on the supplier’s measured risk and/or contribution to its key business objectives such as: (1) Reduce overall supply chain cost; (2) Increase customer service; (3) Enhance product quality; and (4) Increase profit. For corporations to compete globally, they must have a supply base that is as competitive, and one that mirrors its diverse consumer base. Corporations and suppliers must thus be in lock step in order to accomplish mutual supply chain goals.” Burton said, “And this is where NMMI’s Corporate Mentoring Program or CMP comes in as an emerging best practice resource that corporations can embrace to effectively integrate MSMMs into their supply chains and sustain more jobs in the U.S.”

Burton added that performance complacency and not measuring what one manages could lead to the demise of a supplier.  

For suppliers, the objective of NMMI’s Corporate Mentoring Program is threefold: (1) Identify the gap between a MSMM’s performance and its corporate customers’ performance standards — and its customers’ industry groups’ supplier performance requirements — in the core areas of demand management, inventory management, supply planning, order fulfillment and sales and operations planning; (2) Assist the MSMM in the development of plant operations in the areas of manufacturing information systems; modeling and simulation; manufacturing processes and equipment; enterprise management and technology integration; and legal and regulatory; and (3) Assist the MSMM’s in the efficient management and alignment of their own supply chain.

The CMP process systematically engages the corporation to understand their supply-chain management performance objectives, their supplier performance requirements and assemblage of a corporate team consisting of the diversity, sourcing and supply management function. This information is factored into NMMI’s online and in-plant assessment tools to assist in mentoring the MSMM.

The CMP’s engagement with MSMMs begins with their participation in a joint NMMI and Supply Chain Council workshop, which guides each participating MSMM in developing a customized report on their selected metrics and prioritized supply chain attributes, based on validated benchmarking data maintained by American Productivity & Quality Center. The customized performance benchmarking report allows participating MSMMs to assess existing operation to determine the performance gaps between actual functioning and performance corresponding to desired strategic positioning using validated industry specific performance data. Information from the workshop is used by NMMI’s industrial and process engineers in online surveys and in-plant assessment and improvement plan implementation assistance visits. In the continuous improvement process, selected metrics are used by MSMMs in their performance scorecards and displayed via an online-managed digital dashboard viewable by corporations.

Capacity development support is addressed by NMMI through MSMM mergers and acquisitions assistance, foreign trade zones development, teaming with low-cost-country-sourcing small and midsize suppliers, vendor managed inventory and other efforts. Burton said NMMI wants to be positioned as the “go-to” organization for corporations seeking value-added MSMMs for sourcing opportunities. There are about 18 MSMMs currently enrolled in or scheduled to begin the CMP process. NMMI’s goal is to have 300 MSMMs complete the 24-36 months CMP process by 2012. Corporate members will be able to access world-class MSMMs who just happen to be minority via an online portal. MSMMs will be able to substantially reduce their marketing cost since their performance capabilities and capacities as high valued-added suppliers will be visibly available. The online performance portal is designed to be a win-win for everybody. In 2008, NMMI will coordinate efforts with state governments and economic development organizations such as National Minority Supplier Development Council regional councils and Women’s Business Enterprise National Council for intake of MBEs and WBEs respectively.

 The springboard for NMMI’s success is the sustained involvement and support of its founding corporate members including Procter & Gamble, International Truck & Engine, McCormick, Grainger, Toyota, Cummins, Johnson and Johnson, Merck and Microsoft with others committed to joining them in 2008.

“To them, we owe everything, and in 2008 we hope to triple our corporate membership base and market the program to state governments,” Burton said.

Gordon F. Fykes, director of diversity procurement, Cummins, Inc., one of NMMI’s corporate members, said, “I expect NMMI to radically change how we source all suppliers, not just minority suppliers.”

Burton added, “You can’t wish it to happen. In manufacturing, you have to make it happen, collaborate with others, and raise the bar. You cannot do it by yourself.”

To learn more about this paradigm changing initiative, NMMI invites corporations and suppliers to attend its 2008 National Education and Training Conference: “Beyond Diversity: Supplier Development-Raising the Bar in  Manufacturing” in Tucson, Ariz., Sept. 8-10, 2008 or visit the Web site at www.2008Beyond
Diversity.org. or contact David Burton at (301) 998-6185.