The Air Force was curious. So were we.
Was there a better way to work with suppliers—a way wherein it was possible to create a highly collaborative environment designed to not only lower costs, but also achieve higher service and reliability? In an effort to help improve logistics support and maintenance operations for its weapon systems, the United States Air Force asked University of Tennessee researchers to explore this question in detail.
The researchers, in turn, set out to study some of the world’s most successful suppliers. Their findings: The world’s best did things a little differently. Most notably, they moved beyond a simple buy-sell transaction-based approach focusing on price. Instead they adopted longer-term, outcome-based relationships with suppliers—often aimed at seeking higher reliability, lower overall total cost of ownership (TCO) and improved service.
Research led us to a common-sense conclusion: It’s not smart to be penny-wise and pound-foolish. Our findings led to the development of a methodology University of Tennessee researchers have coined “Vested Outsourcing”.
Under a Vested agreement, buyers and suppliers consciously create a highly collaborative relationship based on mutually defined outcomes. The more successful the buyer, the more successful the supplier is. The Vested model is based on five rules I’ve outlined in the book Vested Outsourcing: Five Rules That Will Transform Outsourcing.
Vested Outsourcing provides a clear path for creating highly successful collaborative supplier relationships that—if it’s followed—can deliver decreased costs and increased reliability. That’s a real home run if you’re in charge of maintenance operations. Make 2012 the year to get Vested with your best suppliers. MT