Two sides of the same coin: Using teams in customer-supplier relationships

Cross-functional customer-supplier teams are an effective way to ensure quality and service, as well as to reduce costs. By bringing the expertise of both organizations together, innovation can flourish, issues can be resolved quickly, and a focus on mutual success can be maintained.

The traditional price-based relationship among customers and suppliers is changing. Longterm relationships are being built based on total cost, trust, innovation, quality, and flexibility, and teams are an excellent vehicle to build these relationships.

The Journal for Quality and Participation thought it might be worthwhile to explore how a customer and supplier used teaming to improve products, processes, and services. We contacted Leslie Boston at Medco Health Solutions (the customer) and Carl W. Keller at Vertis Digital Production Services (the supplier) to discuss their experiences with customer-supplier teams.

The Customer's Perspective: Medco Health Solutions

Rooney: Please describe how Medco uses teams to work with its suppliers, such as Vertis DPS.

Boston: Medco has implemented a cross-functional team of managers to interface with Vertis DPS management. The cross-functional team meets monthly to discuss strategy and goals for our business partnership as well as production issues.

Rooney: Who initiated your first customer-supplier team (you as the customer or your supplier)? When did that occur? Describe that initial experience.

Boston. While both companies mutually agreed that a monthly meeting would be a good way to manage our relationship, Medco initiated the first meeting. Moving our production to Vertis DPS was a significant change for our company and Vertis DPS was a new supplier. Having monthly meetings was a very thorough way to ensure all action items were addressed in a timely fashion and that all issues were discussed immediately and resolved before they spread.

Rooney: Why did Medco decide to use teams to work with suppliers? What advantages did Medco expect to obtain?

Boston: We used a cross-functional team to ensure communication was clear to all parties in Medco and to limit the amount of time required for meetings by both Medco and Vertis DPS.

Rooney: What positive consequences has Medco experienced from teaming with suppliers? What issues has it encountered?

Boston: By teaming within our own organization we are able to resolve many problems without Vertis DPS. Teaming within Medco helps us prioritize tasks and issues for Vertis DPS. We have created a relationship with open communications, where many issues are viewed as learning points. We try to work together within Medco and with Vertis DPS to learn from mistakes and move forward. This sharing of expertise between our company and Vertis DPS has produced many innovative ideas to enhance efficiencies and quality. At times, the only drawback of a larger team is that too many issues and ideas can lead to a lack of progress in some areas; however, we seem to identify when this becomes a problem and have subteams focus on the issues at hand to get things moving again.

Rooney: How many suppliers are involved in Medco's teaming program? What are the primary features of your teaming approach with those suppliers?

Boston: The team that interfaces with Vertis DPS has three other primary suppliers working with similar tasks. Medco has not implemented the same organized team approach with these suppliers as we have with Vertis DPS. As a result, the members of the team have different levels of understanding about these suppliers. Also, the communication shared between Medco and the other suppliers is more limited.

Rooney: How does Medco deal with proprietary information when teaming with suppliers?

Boston. Medco has non-disclosure documents that need to be signed by all suppliers when we are sending them proprietary information.

Rooney- What processes do you have for communicating with suppliers? How do you assure that your suppliers understand the intent and specific details of communications?

Boston. Medco communicates with suppliers using various methods including: e-mails, formal letters, conference calls, and face-to-face meetings. We ensure communications are clear by always following up with the opposite form of communication. For example, if we have a meeting or conference call there are meeting minutes taken and action items documented. These are distributed to all attendees and other interested managers.

Rooney: When selecting suppliers, how much does their willingness to serve on teams with you affect their selection? Compare this factor to other selection factors, such as price, product/service features, support services, etc.

Boston: It is a factor, but we drive our relationship with our suppliers. So, once we enter into a contract, if the supplier did not have a plan to participate in a team approach, we would engage them in the activity. Lack of participation in teaming would show up in their performance, which could result in termination of their contract.

Rooney: What tips do you have for other customers who are interested in teaming with suppliers?

Boston: The customer should feel a responsibility in the relationship to affect the service results they receive. Suppliers cannot read a customer's mind. Suppliers can anticipate things based on experience, but if a customer is forward thinking, it needs to articulate specifically its expectations of the supplier and follow through to make sure those requirements are delivered. The less you make the supplier feel like a supplier, as opposed to being an extended team member, the more successful you'll be. The supplier will want to perform well and contribute if it feels a part of the bigger team and is able to see the results of its contributions.

The Supplier's Perspective: Vertis Digital Production Services

Rooney: Please describe how Vertis DPS uses teams to work with its customers, such as Medco.

Keller: Vertis DPS believes strongly that a successful partnership demands open communication between the customer and supplier. The teams at Vertis DPS and Medco are dedicated to keeping this communication a top priority. The teams interact on a monthly basis to exchange information, set goals, and share customer concerns.

Rooney: Who initiated your first customer-supplier team (you as the supplier or your customer)? When did that occur? Describe that initial experience.

Keller: Vertis DPS was initially set up to be a partner with Medco. As part of our contractual obligation, certain goals were set and teaming was recognized as mutually beneficial to both parties. We continue to share the status of meeting these goals, as well as other information in a team-based environment.

Rooney: Why did Vertis DPS decide to use teams to work with customers? What advantages did it expect to obtain?

Keller: We decided to use teams to ensure that all aspects of production met or exceeded our customers' expectations. Going beyond the traditional customersupplier relationship to forge a partnership was the initial advantage we recognized.

Rooney: What positive consequences has Vertis DPS experienced from teaming with suppliers? What issues has it encountered?

Keller: Medco and Vertis DPS have shared a mutual benefit. Through our print-on-demand operation, we have cut cost to the customer dramatically by virtually eliminating warehousing and manual pick-and-pack operations. We have a one-to-one print capability that is critical to the success of the Medco program. This, combined with our unparalleled turnaround time, gives us a definite market advantage; however, we needed to overcome several hurdles along the way. Using customer-supplier teams allowed us to recognize the customer requirements more rapidly, reducing the time to implement the necessary changes to accommodate the customer's program. The end result is a greater return on our investment that we are able to pass along to our customer.

Rooney: How many customers are involved in your teaming program? What are the primary features of your organization's teaming approach with those customers?

Keller: While we do perform work for several other commercial customers, our main focus is on the Medco fulfillment. As opportunity arises, we will continue to use what we have learned through our partnership with Medco. Diverse team participation is a primary feature of our team approach. We are careful to include representatives from sales, production, client services, and quality at the monthly meetings to insure that input is well rounded and we are all on the same page.

Rooney: How does Vertis DPS deal with proprietary information when teaming with customers?

Kelley: We have extremely rigid guidelines to deal with proprietary and personal information. All suppliers, customers, and vendors are subject to a non-disclosure statement and we respect our customer's needs for situations that necessitate confidentiality. So far, this has not been an issue. Security is paramount to our business and we take it very seriously. There is no margin for error. We manage site and data security down to the individual package level by incorporating a unique sequence number on every package produced for 100% accountability. Additionally, any scrap produced is shredded within 24 hours.

Rooney: What processes do you have for communicating with customers? How do you assure that your customers understand the intent and specific details of communications?

Keller. We use e-mail, standard mail, conference calls, and meetings. Medco and Vertis DPS meet on a monthly basis. These monthly meetings include a review of several metrics, including customer issues, turnaround time, and new program initiatives. Medco maintains onsite representatives that are part of the team here. This is a unique situation; we are happy to have representatives on site. We hold daily discussions with the on-site representatives; they are a great resource.

Rooney: When a customer asks Vertis DPS to serve on a team, do you view the request as a cost or benefit of doing business with that customer?

Keller: Anytime we can be a part of our customer's improvement process, or have them be part of ours, we consider it a benefit to both parties.

Rooney: Have you ever estimated the annual costbenefit ratio of working with supplier teams? If you have, what is the approximate value for that ratio?

Keller: We have not performed a cost-benefit analysis of the supplier-team relationship; however, the data we have collected concerning goals (such as reduction of customer issues, turnaround time, and overall volume) clearly indicate that we are realizing definite benefits. In addition, we believe that some benefits cannot be measured in dollars. Our partnership with our customer is the cornerstone of our business, and without it, both companies would almost surely experience higher costs.

Rooney: What tips do you have for other suppliers who are interested in teaming with customers?

Keller: Be as open as possible with your customers in order to go beyond the simple customer-supplier relationship. Partnering to take full advantage of each other's strengths will result in a win-win relationship for all parties involved.

Leslie Boston is the project manager in card operations at Medco Health Solutions, a prescription drug benefit provider located in Franklin Lakes, NJ.

Carl W Keller is a certified quality manager at Vertis Digital Production Services, a one-to-one digital print facility for integrated marketing and advertising solutions in Monroe Township, NJ.

James J. Rooney is a senior risk and reliability engineer with ABS Consulting's risk consulting division in Knoxville, TN. He earned a master's degree in nuclear engineering from the University of Tennessee. Rooney is a Fellow of ASQ and an ASQ certified quality auditor, quality auditor-HACCP, quality engineer, quality

improvement associate, quality manager, and reliability engineer.

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