Schlagwort-Archive: Cooperative

All show and no substance

With digitalization, new storefronts are emerging that convey an image of the business that raises expectations that are not always met. Today, one has the chance to develop its showcase, the website, from a variety of prepared, seemingly elaborate layouts, in such a way that they no longer differ from mature companies. The whole thing is reinforced by customer references, which suggest that good relationships exist. However, it is not possible to see how strong and frequent and lasting services are provided. On closer look, the corresponding logos may even be used without permission – however, where there is no plaintiff… To what extent the company’s desire for exaggerated self-portrayal or mere overestimation of one’s capabilities is the intent, lies in the eye of the beholder. The moment of truth comes when cooperation takes place, and one has to realize that it does not fit soberly. If there is no comparable, inner reality, then we have a typical case of: All show and no substance.

How can you look in advance at the cards of potential partners? Glimpses are provided in the pages ‘Our company‘, ‘About us‘, ‘Our team‘, ‘Our network‘, ‘Products and Services‘, ‘Imprint‘ or ‘Contact‘. In the unlikely case that there are no references on the net, the company should be treated with caution. The following points reveal a rough picture of the company.

  • The plural
    Particular self-employed soloists, e.g., providers, who have no employees, often describe themselves in the plural with ‘we‘ or ‘ours‘. This self-image should be critically questioned. What is the purpose of the plural – concealment of the limited capacity, the indication of an invisible network, or only hubris.
  • The founding myth
    Small and medium-sized companies are often built up out of nowhere by individuals. The history of the founding becomes the storyline of the website. The focal points of the narrative offer conclusions about the cooperation – top-down vs. bottom-up decision making, traditional vs. new values, preserving the old vs. creating something new.
  • The corporate facade
    Enterprises have their websites created by agencies and offer few clues regarding leaders and employees. Here social networks provide a look behind the curtain. Even if especially the leaders are reserved, first impressions of the counterparts can be found – type, age, interests, hobbies, etc.
  • The lineup
    If lists of employees are available, it is crucial to observe how often the individual employees are assigned to different areas. This repetition gives the public the illusion of a larger number of employees. A big number of employees suggests that they are doing good business. Additionally, it is seldom visible how long they have been working with the company, or whether they are still in training. Age is a good indicator of experience and time of employment.
  • The virtual team
    An easy way to simulate size and capabilities is to show business partners. For the self-employed soloist mentioned above, business partners are a backdoor to participate in larger tenders. Many purchasers are making their life easier by applying simple selection criteria – number of employees, references, and price. Self-employed singles fall through the cracks with the argument that they lack the capacities and do not have sufficient skills. And yet the jobs are so unique that the outcome is in any case delivered by individuals – whether they are part of a large company or working alone. The self-employed soloists provide significant advantages – low overhead, agility, and resulting low prices.
  • The cooperative
    Partnerships are another pragmatic approach to stand up to larger companies. For this purpose, competitors temporarily bundle themselves into a cooperative that can fulfill orders jointly. This requires the partners to be willing to represent shared values, pursue similar priorities, and practice consensual action. However, it must be ensured that the contract comes first and not the individual interests of the partners.
  • The hubs
    Corporate networks, platforms, or certifiers are entities in which firms can have one’s reputation certified for a corresponding price. An appropriate certificate conveys to the public that the relevant skills, values, and business practices exist, making the certified ones something special. The seals displayed on the website do not say anything about the companies’ practices, but only for an annual fee and the time of the payment, those deliverables are confirmed – the extent to which independent tests by third parties would confirm this is a matter of faith. It is just the try to make quality standards for soft factors (e.g., leadership, motivation, appreciation, orderliness, etc.) measurable.
  • The deliverables
    The offers are noteworthy, regardless of the size of the company. Are there overviews of the proposals with a link to more comprehensive descriptions? Do the individual actors of the deliverables become recognizable – or do the entrepreneurs put themselves in the center of attention? Do the deliverables provide information about the required efforts – orders of magnitude, calculation scheme, duration? Do the deliverables become comprehensible through additional information – whitepapers, blog posts, links to similar content? Above all, deliverables are difficult to assess since tangible criteria are missing. The duration and the amount of content generated do not reflect their effectiveness. Based on the descriptions, appropriate queries can be prepared.
  • The anonymous
    If the imprint or contact does not provide any indication of the company’s registered office or if the related locations are not visible, then all efforts to establish a connection are superfluous, because the basis for reliable business is missing.

In summary, it is recommended to have a look at the website of a business partner. That way, you get a first impression of the company – beforehand. If the deliverables are convincing, you should contact the company. Depending on the size of the company, you will talk to experts immediately or, in the case of smaller companies, they will call back. If you are bombarded during the conversation with the usual phrases (e.g. ‘increase quality‘,’ speed up processes‘, ‘reduce costs‘, or ‘stimulate growth‘), you should be careful. In the interest of a meaningful discussion, you should summarize the results at the end. For this reason, it is advisable to prepare questions in advance that ensure that the providers are talking about what you are interested in – and not their usual salmon.

Bottom line: Since the Glass Palace no longer makes the first impression of a firm, smaller companies and self-employed soloists can also present themselves impressively. The corresponding formats and contents are created at a low cost and displayed on the Internet. Regardless of the size of the company, it is advisable to take a closer look at these publications. Even if many believe that these contents are not read, all of them create a meaningful external presentation. A closer look at the company’s self-presentation and its deliverables make it possible to assess the company. An additional Google search, also concerning contact persons, completes the picture. In any case, you have the first impression of your contact persons and the company. Trust your gut feeling! If anything seems suspicious, look twice. There is always the danger: All show and no substance.

 

Cooperative Metamorphosis

Henry Ford introduced that assembly-line. He was inspired by Taylorism and also made efforts, to get all levels of value creation under his control. For this purpose his enterprise had temporarily one hundred percent depth of production – plantations for rubber, glass factories, steel plants and power stations for the required energy. The automotive depth of production is on average approx. 20 percent. Thousands of suppliers share three quarters of the value of a car, from simple rotary switch to complicated injection or navigation systems.

Now, for the first time, this decrease of production depth has to be paid for. It took the small supplier’s years, but now they seem to be on eye level with those, who ruled the prices for years with their market power. At VW the production lines stopped, because obviously purchasing gambled away. Are we standing in front of a cooperative metamorphosis between manufacturers and suppliers?

Monopolist

After VW sound the bell for the last transformation, when they hired José Ignacio Lopéz and brought suppliers a new role, VW can not do other than delivering a reorientation concerning the interdependence between manufacturers and suppliers. The stop of Golf production in Wolfsburg that presumably creates for 20,000 employees short-time work is the wake-up call for the entire industry. The following mechanisms burdened the harmonious cooperation over the years.

  • Adjustment of the supplier portfolio
    After the internal improvement efforts and due to the low depth of production, there are not so many opportunities for reducing the expenses. All that remains is reducing the costs for the externally delegated 80 percent. In the absence of monetary incentives, the outside vendors could only be provided a benefit with the privilege of being part of the supplier circle. This means sometimes that they can participate to bid and to receive the traditional title purveyor to the court, as so-called strategic suppliers.
  • New pricing models
    Only the enormous quantities offer a large lever that result in favorable conditions and prices. The huge numbers of items are the incentive for the suppliers. Simultaneously the timely and variant-oriented deliveries require further resources that additionally diminish the yield.
  • Exhausted terms of payment
    The payments are not aligned to the need that the suppliers receive their money quickly, but they are based on the financial reporting dates. Consequently, the supplier carries the expenditure of the financing. This means that we talk about six months of prefinancing in the case of the procurement of material. However, there is no payment after delivery, but manufacturers wait, based on agreed payment targets for over three additional months to eventually pay their dues. The bridging of these time spans has to reproach the supplier – beside the raw materials, the wages and salaries, the storekeeping, the operation of the infrastructure etc.
  • New forms of negotiation
    The personal negotiations in private that were the basis for trusting cooperation, are replaced by formal tender procedures and electronic forms of negotiation. The personal contact is removed from the businesses. This leads to quasi-automatic decisions based on good value for the money and general quality standards without personal impressions.
  • One-sided contract terminations
    In many purchase departments still prevails the illusion to sit at the longer lever, since there are world-wide enormous amounts at suppliers, who seem to be ready to deliver at lower costs. This results quickly in the fact that a supplier, who falls in disgrace, will be eliminated in the blink of an eye.
  • Risk delegation to the suppliers
    The upstream procurement of material and the stand-by resources increase the risk unilaterally to the disadvantage of the suppliers. If a contract expires or the manufacturer terminates a running contract, this can quickly lead to insolvency.

The possibilities to reduce the costs at the expense of the suppliers reached their limits. Also suppliers use outsourcing into country with low-wages. However, considering the narrow margins and the interdependence, new models for cooperation have to be found. The required exchange of information must take place mutually and count on Win-Win. In the future it will be essential that the buyers will be in personal contact with the suppliers, in order to get a local impression and to get in such a way to realistic estimates. The persistent compliance that was introduced particularly in the interest of the shareholders did not prevent abuse by particular people and harms cooperation.

Bottom line: Interaction between manufacturers and suppliers must be brought to a new level of confidence and joint benefit. The distribution of the value creation needs a reorientation in the economy and even for the politicians, who nowadays stand up for VW although they silently sat out the precarious situation of the suppliers for years. At the end of this phase the industry will be empowered, since the current inclination will be balanced out. This metamorphosis will again weld together manufacturers and suppliers, since the one cannot without the others.