Co-Founder, Berlin KraftWorks Inc.
We’re living in interesting times. Presently, companies of all types and sizes are scrambling to figure out how to survive, and how to successfully restart their operations thanks to COVID-19. Social media platforms have been inundated with information. Some helpful, some, well…not so much.
Just before the pandemic, these same sources were filled with starkly different messaging: You need to go faster, cheaper. You need to buy this software package. Lists of things you need to buy, types of people and consultants you must hire, otherwise there will be world-ending consequences for your business. Then my all-time favourite myth – manufacturing is dead. Well, we all just realized at once, that manufacturing and supply chain are critically important to our nation’s well being and must be viewed strategically, not transactionally. Our economy, our health and our safety depend on it.
Recently, I’ve enjoyed the shift in topics to discussions about how business may reinvent itself. I’ve been excited to hear and read about firms taking exceptional leaps, and even how competitors have become stronger collaboratively without giving up their respective competitive advantages. Effectively doing away with symptomatic solutions and focusing on the bigger picture for every business.
Over the past 20 years I’ve worked with hundreds of suppliers from mined raw materials to electronics to food to massive capital equipment and everything in between. Yet, one supplier relationship stands out for me as I look back, as having been the most trusted, most reliable supplier I had ever worked with. They achieved this with such a simple approach that required nothing other than effort, and which any company anywhere, could implement immediately without outside assistance.
This particular supplier was based in South Korea, and their business provided a technology that was not produced here in North America. There was a bit of a language barrier, but almost immediately from the first contact something became obvious – this supplier demonstrated an unwavering focus on listening to their customers.
The first 6 discussions with this supplier around technical requirements and capabilities specific to the project I was involved in at the time, whether by phone or email, resulted in the same answer: “I don’t know.” We don’t ever want our suppliers to say “I don’t know”, right? Isn’t that why we contact them, because we expect them to have the answers and then once they provide them, we’ll decide for ourselves if we agree and move on to the first supplier who seems to have the right information at the right price. Or do we?
In business, people feel compelled to give an immediate answer rather than make their colleague wait, or due to fear of not appearing knowledgeable. When we call suppliers, we expect them to have all the answers, even if we haven’t properly articulated our needs, or even if we don’t yet fully understand our needs. These expectations, on both sides of the conversation, set the stage for problems because we aren’t creating dialogue. Instead it becomes a transactional approach, which ultimately won’t satisfy the true needs for supplier or customer as gaps always present themselves down the road. Yet firms of all kinds will do this dance day in, and day out.
As it turns out, my favourite supplier of all time almost never had the answers when first asked, and most certainly was not the cheapest. However, they were the most reliable, most honest, and had the best quality by miles.
“I don’t know” was immediately followed up with “but here’s what I’m going to do to find out for you,” which was then followed up with action. He would tell me when he would respond with the information and did exactly that - on time, every time. If the question was about deliveries, he would respond on time with specific information, and goods would ship and move exactly when he said they would. If the answer was ever bad news such as “we can’t provide it to you that fast” or “we can’t meet that technical requirement”, there was no sugar coating, no excuses. Just factual information, and then suggestions for alternatives and an openness to seek creative solutions. If the answer ever required talking with someone else, he would set that up and facilitate it.
That blunt honesty, followed up with demonstrated commitment to action, still remains (to me) as the most powerful value any supplier has ever offered me. And yet it's challenging to quantify at all if the measure is unit cost alone. However, in this instance I could extrapolate how much time I was saving through clear communication, virtually zero quality problems, and only one late shipment due to a labour strike at a North American port. I could also estimate the savings of avoided late penalties from our own customers, avoided lost time and delayed production, because I was able to accurately plan my own business, manage my own costs and subsequently deliver the same commitment of information to my customers. This supplier absolutely didn’t have the lowest price, and cost accounting and unit cost metrics would have insisted I dump them for cheaper options. But I estimate (with the values I can calculate) that their strict adherence to honest responses, and equally strict commitment to do what they said they would when they said they would, saved my firm 10.5 times over the cost of buying the “cheaper” alternative from other suppliers over the same time period.
Today more than ever, companies could find space to survive or even scale in a cost margin that big. And that was just one supplier, imagine how much it could impact your entire supply chain.
COVID-19 has caused our world to change daily. While it has been forced upon us, more and more we are becoming comfortable with saying “I don’t know”, and that opens the door for a real exchange of ideas. It sets the stage to build solid supplier relationships that are based on listening and data and not on saying what we think the customer wants to hear which sooner or later ends up costing time and money for both supplier and customer alike. I love the power of “I don’t know” for all the opportunity to collaborate and deliver real customer-focused value that follows that statement.