Managing Bad Procurement Strategies and Bad Supplier Quality

A continuation of an interview with retired CEO, AMREP SMS on the subject of managing supplier quality in China, Asia and India and with Mike Lee, Asia Supplier Management Journal.

 

Mike Lee: You said AMREP has provided supplier management support to well known International Procurement Offices in Asia and China since 1982. You included IBM, Dell Computers and Motorola plus others as customers. These companies have their own quality control and quality engineering staff, and yet they used your company. Why???

Derrick Goh: It is all about picking the right person for the job to be done. Most procurement managers and strategies have poor ground level knowledge of the working characteristics of the suppliers they selected. Most of their technical and quality staff  have good university degrees but short-term manufacturing experiences, and little skills in handling difficult suppliers. Consequently, my people are called in to solve supplier problems which our customers’ procurement people created and their technical and quality people cannot cure.

 

Mike Lee: You implied the Customer creates procurement problems for themselves.

Derrick Goh: Yes and No. We dealt with different suppliers with different managements these past several years. Be it a Taiwanese, Japanese, Singaporean, Thai or Indian operation, the shared fundamental objective is to maximize production and send it out ASAP. Therefore, all factory employees work hard at achieving this through all means applicable. Meaning, making unachievable promises, wine, dine financial seductions, friendly socializing and more.

 

Mike Lee: So how does one manage these problems?

Derrick Goh: The customers’ problems create opportunities for our service. We cannot solve the customers’ internal staffing problems. Make a China guy your procurement strategist and he is strategizing to create a business for himself in the China of opportunities. Place an American procurement manager inside China office and he is creating a little kingdom for himself.

 

We can handle the suppliers’ problems. The supplier quality people we send into suppliers’ factories must obey and conform to self-preservation operating rules. For example, our supplier quality personnel cannot socialize with the suppliers’ senior production people, including not having meals with them or be entertained in the factory. Managing employee integrity and honesty is a challenge to us. I did not invent this. I learned it from my first customer-IBM.

 

Mike Lee: Your focus is on managing the suppliers’ technical and quality problems relating to procurement

Derrick Goh: There will always be technical and quality problems with in production. Practical product and manufacturing experiences are good ground level experiences which lead to better supplier problem resolutions.

 

 Suppliers find it easier to work with practical production and quality specialists. I think they really get wheezed off by someone employed by a big company and talking like God. When IBM was our customer, the suppliers described the local IBM procurement and quality specialists as Idiots Become Managers.

 

Mike Lee: Let’s talk about Supplier Management Services the next time.