“Two Thoughts on Partnerships”

All successes in materials handling systems projects are dependent upon the quality of the partnership between the customer and the supplier, and sometimes, a consultant. Within the past month, I have been party to the beginning of a new partnership and the demise of an existing one. There are lessons, and many unresolved questions, too, in both.

A failed partnership, of course, is the expected result of a failing project. Sadly, there were probably alternatives for saving both the project and the relationship. But too much water had passed under the bridge by the time that failure was imminent. Team members from both sides are worn-out, having sacrificed family life and dedicated a significant portion of their lives to the project. Hard lines are drawn and contracts, rather than compromise, rule the day.

In hindsight, an objective, and perhaps creative party can almost always find ways that slight changes in concept, a few key enhancements and a little more money could salvage most of the value of the project. Remember, it’s the customer who always pays! It is better to step back, re-evaluate and spend a little more to get 80% of the solution than to hold the line, and budget, and get only 20%. Calculated separately, the ROI on the fix is much higher than the expected ROI on the original project.

What’s the answer?

• Maintain a high-level focus on the results, but don’t ignore the details.
• Keep the designers involved in the project.
• Resolve critical problems early, even if it is painful. Don’t hide them, or assume that miracles will happen late in the project.
• Call for outside help. Success is more important than pride.

At the other end of the spectrum is the beginning of a new partnership. This is generally an optimistic and upbeat phase of a project. Competitive bidding seems to be the most conventional approach for choosing a partner. Having had experience as a customer, a design consultant and a systems integrator, I find a few troubling aspects here, too.

The bidding process extends the project schedule and requires expensive and redundant efforts by the competing suppliers. Choosing the low bidder does not insure selection of the best partner. Competing bids are too often solicited only to provide a price check on the supplier whose experience and “chemistry” seemed at the outset to make the best partner.

A specification focused only on performance leads to a wide range of solution approaches that are difficult to compare. They have different levels of automation, different capital costs and different operating savings.

A rigid design requirement takes time to prepare and creates a price war, in which suppliers may be inclined to skimp on capacity or quality to keep the price low. The potential impact on reliability and performance is not usually visible to the customer.

With today’s pressure on quick results, our goal is to select the right partner, as quickly as possible and at the least total cost. So, is there a better alternative to the traditional competitive bidding process?

An interesting approach that I witnessed recently provided basic design data to several prospective suppliers. They were then given only a couple of weeks to develop preliminary systems concepts with broad budgeted costs as part of their proposal for an engineering contract to determine the final solution and price. This did minimize the redundant costs incurred by the suppliers, but does leave open the issue of lowest price.

One might certainly argue that a fair price from the “best partner” is more likely to yield a successful project than the best price from lowest bidder.

ABOUT THE AUTHOR

James M. Apple, Jr. is a Director in The Progress Group. Prior to co-founding The Progress Group in 1991, he was a Partner with Coopers & Lybrand's SysteCon division. During 1992-1995 he served as a Senior Systems Advisor with Vanderlande Industries, a major conveyor and systems provider in Europe.

Jim is an internationally recognized thought leader in the area of facility design and integrated distribution systems. His contributions to the improvement of distribution practices have been recognized by his receipt of the prestigious Reed-Apple Award, which is given for lifetime contributions to the advancement of the material handling profession. Jim has also received the Institute of Industrial Engineers' Facilities Planning and Design Award. He has written numerous articles and handbook chapters on warehousing and logistics operations and is a popular speaker on logistics seminar and conference programs.

Prior to SysteCon, Jim worked as an Industrial Engineer with IBM, was Supervisor of Facilities Planning for the Oldsmobile Division of General Motors and was Executive Vice President for an automotive aftermarket parts supplier. He holds B.S. and M.S. degrees in Industrial and Systems Engineering from the Georgia Institute of Technology.