Early involvement of purchasing in the design process could have avoided these problems—especially if purchasing has the expertise to deal effectively with technical personnel in vendor and in-house organizations. Recognizing this potential, some companies, Eli Lilly and Motorola among them, have begun to hire MBAs with technical backgrounds for assignments in purchasing.
The total value added by U.S. manufacturers has declined for at least two decades as companies have increasingly turned to their suppliers for complex finished parts and assemblies rather than for raw materials and commodity items. As the importance of vendors grows, maintaining satisfactory relationships with them becomes a managerial and technical operation of the greatest importance. Experience shows that long-term, collaborative arrangements mutually benefit both the customer and the supplier. Theodore Levitt compares the relationship between industrial buyers and sellers to a marriage. A courtship stage takes place during which both sides investigate technical and commercial issues; a sale consummates the courtship; and a long-lasting marriage may ensue. As Levitt notes, “The quality of the marriage determines whether there will be continued or expanded business, or troubles and divorce.”3Both buyer and seller have a vested interest in the relationship, and both must work to make it succeed. In a manufacturing company, purchasing must establish and manage the relationship.