1 Measuring Customer-Supplier Team Performance Kimball E. Bullington, Ph.D., P.E Middle Tennessee State University

2 Overview Importance of Customer-Supplier teams Measures of Team Performance –Preparation –Task –Process –Presentation tips Summary

3 Importance of Customer-Supplier Teams More than a fad Threatened by B2B Still an important part of supply chain management

4 Why Long-Term Relationships? A long-term relationship between purchaser and supplier is necessary for best economy. How can a supplier be innovative and develop economy in his production processes when he can only look forward to short-term business with a purchaser? W. Edwards Deming, Out of the Crisis

5 Why Long-Term Relationships? Trend toward LT contracts since 1990 Pressure to reduce price Pressure to reduce transaction costs Consolidation pressures

6 Surveillance Low spend - high risk Partnership High spend - high risk Contractual High spend - low risk (Easily substituted) High Low High Risk Annual Spend Supplier Characterization Matrix Transactional Low spend - low risk

7 Surveillance Low spend - high risk Partnership High spend - high risk Contractual High spend - low risk (Easily substituted) High Low High Risk Annual Spend Supplier Characterization Matrix Transactional Low spend - low risk

8 Surveillance Low spend - high risk Partnership High spend - high risk Contractual High spend - low risk (Easily substituted) High Low High Risk Annual Spend Supplier Characterization Matrix Transactional Low spend - low risk Minimize transaction Costs, Consolidate

9 Surveillance Low spend - high risk Partnership High spend - high risk Contractual High spend - low risk (Easily substituted) Buy on price – B2B Long-term contracts High Low High Risk Annual Spend Supplier Characterization Matrix Transactional Low spend - low risk

10 Surveillance Low spend - high risk Watch very closely, Design out risk, Consolidate, Select new supplier Partnership High spend - high risk Contractual High spend - low risk (Easily substituted) High Low High Risk Annual Spend Supplier Characterization Matrix Transactional Low spend - low risk

11 Surveillance Low spend - high risk Partnership High spend - high risk Most important suppliers, X-functional C-S teams Contractual High spend - low risk (Easily substituted) High Low High Risk Annual Spend Supplier Characterization Matrix Transactional Low spend - low risk

12 Importance of Customer-Supplier Teams Choice based on price still not best way High risk & spend merits team resources Resources must be focused

13 Measures of Team Performance

14 Measures of Team Performance Preparation Task Process Presentation

15 Measures Preparation Team charter Business strategy Customer needs Supplier selection criteria Team composition Criteria for good performance

16 Team Characteristics, Processes & Performance Variables Environment Procedures Policies Culture Strategy Mission Urgency Task Characteristics Team Member Characteristics Team Characteristics Team Process Team Effective Team Perform. Variation After Brannick, Salas, & Prince

17 Criteria for Good Performance Measures important to customers & team Team action influences key measures Data easy to capture, analyze, & understand Ample data to establish significance Garwood & Hallen, 1999

18 What are the customer’s expectations of the team? Team breakout

19 Surveillance Low spend - high risk Partnership High spend - high risk Most important suppliers, X-functional C-S teams Contractual High spend - low risk (Easily substituted) High Low High Risk Annual Spend Supplier Characterization Matrix Transactional Low spend - low risk

20 What are the customer’s priorities for the team? Team breakout

21 Customer Task Perspective: Selection Criteria Price (Cost) Delivery Quality Communication Service Technical assistance

22 What are the supplier’s expectations of the team? Team breakout

23 Supplier Task Perspective Profit Payment timeliness Schedule integrity Specification integrity

24 Team Process Measures More difficult to measure Not of interest to management? Important

25 Team Characteristics, Processes & Performance Variables Environment Procedures Policies Culture Strategy Mission Urgency Task Characteristics Team Member Characteristics Team Characteristics Team Process Team Effective Team Perform. Variation After Brannick, Salas, & Prince

26 What are appropriate measures of the team process? Team breakout

27 What is a good team process?

28 Team Process Models Team Handbook Team Memory Jogger Family Strengths Model

29

30 Team Process Measures Communication –Surveys –Response time Commitment –Meeting attendance –Commitments kept Improvement Bullington & Bullington, 1999

31 Team Process Measures Group homogeneity –Task orientation, need for achievement –Innovation Cohesion –Group morale –Group commitment Brannick, Salas, & Prince, 1997

32 Team Process Measures Communication –Structure better for structured tasks –Flexibility better for uncertain tasks Brannick, Salas, & Prince, 1997

33 Team Process Measures: Communication Example Commands Suggestions Acknowledgements Intent Brannick, Salas, & Prince, 1997

34 Presentation Tips Know your audience Internal – external measures Separate process from task Maintain strategic measures Integrated measures Graphical display

35 Radar Charts

36 Radar Charts

37 Radar Charts

38 Radar Charts

39 Summary Customer-Supplier teams remain important Team Performance Measurement includes –Preparation / Assessment –Task –Process Presentation tips

40 Measuring Customer-Supplier Team Performance Kimball E. Bullington, Ph.D., P.E