Meeting of the Minds

Meeting of the Minds

Of course it's hard to forge strong relationships with fly-by-nights who come and go. In Kalisch's eyes the biggest challenge in the account management space is the constant movement of people in and out of vendor organisations."I've been with the firm now for a long time and I have probably seen members of our account management team change on average every year at most of those vendors," he says.

"It's very difficult to form a lasting relationship, very time consuming to actually allow every new member of these [vendor] teams to get to know you to supposedly provide a more customer-focused service. We've been very fortunate with one of our relationships, which is our Toshiba channel, in that we have been dealing with the same people now for 10 years. That is just the most successful and happy and good quality relationship that you could ever want with a vendor. If I could do that with everybody, I would be a very happy person."

Invariably, vendor representatives who leave their organisations turn up somewhere else and want to talk to you again, Kalisch says. Other than applying pressure, he's found there tends to be little an organisation can do about the lack of longevity within relationships.

To manage its most significant vendors (suppliers include Toshiba, Dell, Compaq and Microsoft), Kalisch likes to meet with suppliers frequently. He eschews scheduled weekly or monthly meetings in favour of get-togethers based on need. When he does meet with suppliers he likes to involve people at different levels of both organisations to reduce the reliance on single individuals. He tries to get technical people from both sides talking as well."They tend to communicate at different levels. [This way] they can have their own relationships, which I think is extremely important," Kalisch says.

Like Darling, Kalisch endorses the carrot-and-stick approach and says while any organisation would prefer never to use the stick, inevitably times will come when it must. Unfortunately, he says, that stick doesn't always work. Too many vendors tend towards complacency when you've been dealing with them for a while, he says. Nor does the stick tend to work on organisations that have become overly internally focused.

That's where the carrot might help. At Nabalco Darling says introducing a competitive incentive has proved one of the best ways of ensuring strategic alliance partners never become complacent. It helps put them on notice that their performance is under constant scrutiny."We invite suppliers and customers and management and a lot of people to [compete for] that supplier award. It is very much a kudos thing, full of prestige. It's part of our efforts to come to grips with making our suppliers perform without having to bash them around the ears; we want them to perform without having to do that," Darling says.

But Nabalco's vendor relationship strategies go much further than that. The company is constantly monitoring and reviewing vendors' performance, and feeds back performance statistics to each one every month. It categorises vendors according to Boston Consulting Group's Boston Box analysis (see"What's Inside the Box?"), rating their criticality to the company versus spend. It then forges strategic alliances with companies it characterises as high criticality and high spend, and tends to dump those it characterises as low criticality, low spend. Hence its recent decision to dispense with 100 suppliers.

"What we say is that it's not about the item cost, it's about lowering the overall cost of managing these suppliers," Darling says."Sometimes you pay more money for the item but overall if we're passing that to a supplier that has automatic invoicing and seamless processing, the overall cost of doing business with those suppliers is greatly reduced."

Nabalco monitors and manages each alliance and provides monthly feedback on their performance statistics. But to encourage vendors to take ownership of the measurables, it also gives them a chance to challenge the metrics if they feel Nabalco has got things wrong.

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