Bill Michels, CEO of ADR North America, a supply chain management consulting company, details how his company sees the evolution of supply chain practices over time and outlines the different skill sets required. This is a prelude to further conversation regarding the products they have developed to meet these needs and how he views global sourcing.
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In this nine and a half minute podcast (downlaod ipod compatible, 47MB), Bill Michels, CEO of ADR North America, explains ADR's pace model of supply chain management. This conversation sets the stage for a series of segments on how ADR helps foster innovation in the supply chain.
The pace model might be thought of as a framework that helps identify the different phases a company might experience in managing its supply chain:
- Price drift: The supplier is increasing its price to the purchaser but experiencing relatively stable costs. The supplier is capturing all of the value in the difference between what it charges and what it pays.
- Price down: The purchaser starts to demand back some of the surplus from the supplier.
- Cost down: The purchaser and the supplier start to cooperate in getting the supplier's cost down so that they can continue to make margin.
- Cost out: The purchaser and the supplier move to radically rethink the supplier's offering to continue to get cost out of the product for the purchaser.
As might be apparent from this description, different skill sets are required at the different phases. In our next segment, Bill describes how ADR developed an assessment tool for diagnosing whether companies have the right skills for the stage they are in. In a later segment, we'll talk about how offshoring can complicate the picture, particularly in the later, strategic stages of the relationship.
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