In a previous discussion we mentioned the various different metrics in your supplier development process. During this discussion we will explain the rationale for why you should separate these metrics.
Conflicting areas of growth
As a large company you have specific areas that you view as core to the organisation. On average your supply chain needs would be largely related to these core areas. Most of the supplier development efforts elsewhere in the world are focused on the improvement of these operational areas. This leads to a focus on improvement in areas such as lead times, quality and cost improvements.
In South Africa however the needs for supplier development practitioners are different than internationally. Your primary goal as an ESD practitioner is not necessarily to increase performance, but to increase diversity in the supply chain and stimulate economic growth.
This difference places the majority of your emphasis on sustainability of the supplier rather than a singular focus on operational improvement. Operational improvement could however be a pre-requisite for sustainability, depending on the relationship between the core value add of the supplying company and the core value add of the buying company.
That said, however, if the relationship between the sales and growth of the organisation and the day to day operations are not closely managed, the noise in the one area could drown out the focus on the other area. This is especially true in areas where the entrepreneur is responsible for the sales as well as for the day to day operations. In some companies the demand on the entrepreneur’s time would be so overwhelming that they would sacrifice the future of their company for today’s performance needs.
The ambidextrous organisation
The concept of managing these two dynamics is similar to that described by Tushman & O’Reilly (1996) when describing the ambidextrous organisation. The goal is to manage both simultaneously, but recognizing that they are two competing areas. This is specifically true in the start-up stage of the company. The theory is that start-up companies should create systems from the beginning in order to separate operations, sales and strategy. Rarely is this achievable if the organisation has not developed a certain amount of scale.
A successful supplier development practitioner is one, therefore, that realises these competing areas and manages and measures both in order to achieve successful outcomes.
Tushman, M. L., & O’Reilly, C. A. (1996). Ambidextrous organizations: Managing evolutionary and revolutionary change. California Management Review, 38, 8-30.