Improving Supplier Collaboration

Introducing an easy lossless exchange of Specifications

Resulting in clearer communication, faster contracts and reduced administrative overheads

I would like to share some thoughts on improving supplier collaboration in the context of specification exchange. This is based on a customer case. Your inputs are welcome!

Product development and systems engineering are complex. Manufacturers are relying more and more on suppliers to achieve their goals to launch innovative, reliable products faster to market. Effective communication and collaboration are key in making these relationships successful.

An effective supply chain management is a very important factor for the overall business success. As a result, building up good supplier relationships and improving the business processes to create value is a primary goal helping to make greater products faster, less costly and with ease. Leveraging Digital Solutions in a valuable way will be critical in the future.

One of the key tasks with suppliers is communicating the needs (i.e the specifications) in a consistent way and making sure the specification are understood correctly, or that these can be clarified in an easy and effective way for both sided involved. Improving this communication channel, that is to help to establish a common understanding resulting in clear, concise and complete information of the needs is an important part in this process. Getting this interface between the manufacturer’s procurement department and the supplier’s buying department correct and empowering the people involved, is becoming ever more critical for making product development successful. This needs to be taken ever more diligently. This is further becoming ever more important in order to increase speed, especially, the more complex the needs (i.e. the specification) are becoming.

Currently a lot of exchange is through documents and/or spreadsheets accompanied by lot of emails, telephone calls and other ways of communication. As a result when dealing with many suppliers and getting feedback, this way of working can be a very cumbersome and error prone leading not only to misunderstandings, but also to delays and false interpretation and as a consequence additional and costly feedback loops. This delays supplier selection and contract signature resulting in delayed market entry. Even in the case of clearly structured documents it is normally very difficult (or at the least time consuming) to trace the changes and analyze the feedbacks from several suppliers systematically and incorporate them effectively.

The question is: How can this be improved?

Underlying goals for a better solution baseline.

• The solution needs to ease substantially the collaboration and thus the communication for BOTH sides – buyer and seller. It needs to be a significant improvement for both sides.
• The solution shall not require special skills and long training for buyer (manufacturer) seller (supplier) personel to use. We defined a max. of 15 minutes.
• The solution shall ease parallel communication streams to several potential supplier for the buyer and thus ease management of the feedback cycles of each of them.
• The solution shall help in clarifying communication and enabling improvement, comments.
• There needs to be a clear, easy and seamless process between the internal R&D (the "Master Record") and the purchasing department and back again.
• The process shall allow to shield certain information if needed for any reason (i.e. security, privacy etc.)
• The solution shall allow to define subsets of specifications as required.
• The solution shall be easy to administer, ie. minimal need of IT.
• Onboarding a new supplier shall be easy, ie. so easy that it does not impact current onboarding process significantly.Core Principles of Solutions

We thus built up a better way of working with suppliers based on the above goals and following core principles:

Structuring the process

• between R&D and the supplier management team (procurement) at the manufacturer
• between procurement of manufacturer and supplier

Standardizing the communication channel

Focusing on an easy, simple, complete and validated exchange

Specification format based on an official industry standard

As mentioned, the aim was from the beginning, that both parties, the manufacturer and the supplier, shall benefit from this change.

We have as a result found and implemented a better way (refer to graphical overview above) with a lead customer of ours who is building a very innovative complex mechatronics system. The new technologies involved in the system are driving them to find many new suppliers. As such the exchange of the technical needs needed to be as easy and clear as possible to make the process viable. For more information please refer to our Whitepaper[1], the link is also given hereafter.

What is important is that all information is contained in one data file. This xml based file is structured similar to an excel file but allows full traceability and structured comments. The editor is further very easy to use and thus fast to learn.

The feedback from the customer has been overwhelmingly positive and all their suppliers involved in the this first stage, even if reluctant at the beginning are seeing the benefits of using this structured way adopting to this new way very fast. Further, the learning goals and needed training of less than 15 minutes were met. The suppliers recognise the benefits of the clear and structured way which has improved better understanding, commenting and more effective communication.

The only issue we had was the licencing model at the beginning inherent to the baseline tool involved. However, based on the feedback, this was completely changed into a model which for the customer is very easy to handle and minimises the overhead to an absolute minimum.

Collaboration between companies is becoming ever more important. Solutions as the one described here, which help to ease the collaboration process are becoming seminal to achieve more easiness in the collaboration and a significant increase in speed to select suppliers and sign contracts faster in the RFI, RFP, RFQ[2] process.

We would be interested in hearing about your challenges when working with partners and suppliers, especially when sharing specifications. Please feel free to ask any questions. Also, if you want to find out more about the approach and solution we took.

At EVOCEAN we challenge the status quo daily to find better ways of working together in product and systems development. This example shows that simple bespoke solutions can leverage collaboration in a significant way helping all parties involved to achieve their goals faster and easier.

[1] Refer to Whitepaper for more details on customer case.

[2] RFI: Request for Information, RFP: Request for Proposal, RFQ: Request for Quotation.