John W. Henke

Perspective: Cross-functional teams: Good concept, poor implementation!

Abstract Since the late 1970s there has been a substantial increase in the use of teams in the product development process. However, even as more manufacturing firms are initiating the use of teams, their value is being questioned by firms that have used teams for years. Based on interviews in dozens of U.S. firms, John Henke, Richard Krachenberg, and Thomas Lyons suggest that most firms are not using teams as effectively and efficiently as they could and should be. In an attempt to overcome this shortcoming, the article discusses the systems characteristics and organizational implications of the multifunctional product development team, including the benefits linked to the use of teams; the current state of team design, and where improvements can be made; and team-people issues, including communications, decision-making processes, and leadership styles. Specific suggestions on what must be done to improve team effectiveness are also discussed. Finally and most importantly, the article discusses what firms are doing, often inadvertently, to discourage the future use of teams and how these activities can be overcome to maintain the continued viability of teams over the long run.

Cross-Functional Teams: Good Concept, Poor Implementation!

Since the late 1970s there has been a substantial increase in the use of teams in the product development process. However, even as more manufacturing firms are initiating the use of teams, their value is being questioned by firms that have used teams for years. Based on interviews in dozens of U.S. firms, John Henke, Richard Krachenberg, and Thomas Lyons suggest that most firms are not using teams as effectively and efficiently as they could and should be. In an attempt to overcome this shortcoming, the article discusses the systems characteristics and organizational implications of the multifunctional product development team, including the benefits linked to the use of teams; the current state of team design, and where improvements can be made; and team–people issues, including communications, decision-making processes, and leadership styles. Specific suggestions on what must be done to improve team effectiveness are also discussed. Finally and most importantly, the article discusses what firms are doing, often inadvertently, to discourage the future use of teams and how these activities can be overcome to maintain the continued viability of teams over the long run.

Strategic Selling in the Age of Modules and Systems

Abstract Manufacturing industries are looking to their suppliers, with increasing frequency, for modules and systems, not just components. This is particularly true in the automotive industry where the industrys procurement and engineering activities provide lessons about selling modules and systems that can be applied to virtually any other manufacturing industry. These lessons include the need to identify and understand the benefits of modules and systems, the impediments that might hinder a manufacturer from acquiring modules or systems, and how a supplier can successfully sell modules and systems in spite of these impediments. This article shares these lessons and the subsequent implications for developing a sales strategy for selling modules and systems. The end result is that suppliers and their salespeople, regardless of manufacturing industry, will be better prepared to maximize the opportunity to successfully sell modules and systems.

Manufacturer price reduction pressure and supplier relations

Purpose – Manufacturer price reduction pressure on suppliers is an important contributor to helping a manufacturer maintain a strong competitive position by keeping costs low. The benefits of trusting supplier working relations also help strengthen a manufacturers competitive position. The purpose of this paper is to determine if manufacturer price reduction pressure and trusting working relations with the pressured suppliers, typically considered to be mutually exclusive, can co‐exist.Design/methodology/approach – A structural equation modeling approach was used to analyze data covering 946 production buying situations involving 279 suppliers and six NA automotive OEMs.Findings – Manufacturer price reduction pressure and trusting working relations with the pressured suppliers, are not mutually exclusive, they can co‐exist.Research limitations/implications – The research found that it is not the pressure that impacts the manufacturer – supplier relations, but rather it is the manner by which the manufact...

The isolation of upper management

D espite having been discussed for years, the problems of centralization, autocratic management style, and poor communication linkages between top management and the rest of the firm still plague American business. A key reason why these problems still exist is because they are discussed as separate issues and in an excessively simplistic manner. They are, in reality, a manifestation of interrelated causes and must be dealt with as such. Because there is more than one cause, there is also more than one solution, and they too.are interrelated. The atypical solution is to decentralize decision making. When applied singularly and carried to an extreme, it can cause an organization to suffer from a loss of lateral coordination without reducing upper management’s sense of isolation. However, when decentralization is combined with enlarging the spans of control of most managers and having top managers accept the responsibility for more two-way communication with lower level managers, a very different situation evolves. Decentralization allows upper managers more free time to talk with, and listen to, lower levels. Larger spans of control reduce the number of vertical levels while broadening each one. This in turn facilitates developing informal groups and teams. Still, the solution does not end here, for these actions need the support of very different evaluation processes and reward systems. Current systems need restructuring. The problem of upper management isolation never will be eliminated. Not one of the proposed individual solutions singularly will solve the problem. However, all of them in combination can reduce it to a manageable size.

Competing against an in-house supplier

Abstract A not uncommon situation in industrial marketing is for an outside supplier to find itself competing against an in-house supplier. Knowing how to compete against an in-house supplier is of importance because industrial marketing firms typically respond with one of two diametrically opposed actions: they act as if the situation is no different than competing against any other supplier, or they assume that they have no chance—and back off. Neither approach is realistic. The fact that the current supplier is in-house will not impact the probability of the outside vendors success. Rather, it is the nature of the relationship between the buying organization and the in-house supplier that is of paramount importance in determining the likelihood of replacing an in-house supplier. This article presents a decision-process model useful for ascertaining the sales opportunity when competing against an in-house supplier. Alternative marketing strategies are also suggested.

A Comparative Study of the Impact of B2B Price Pressure: An Abstract

Adversarial price reduction pressures are often viewed negatively by suppliers to original equipment manufacturers (OEMs). However, the practice of using price pressure on suppliers is fairly common in numerous industries throughout the world, and literature is unclear on this issue. The current research seeks to challenge the proposition that price pressure on suppliers necessarily results in poor supplier-OEM relationships and to find out whether price reduction tactics and good relationship can exist simultaneously. An eight-construct research model with overall relations as the dependent variable and with price pressure and other OEM subjected pressures (like quality expectations) as the exogenous variables is tested using data collected from North American, European, and Asian suppliers to OEMs who manufacture automobile heavy vehicles and electronic products. Analysis using confirmatory factor analysis and structural equation modeling revealed the existence of similarities and differences between the two data sets. While the automobile data set revealed that the impact of pressure takes place mostly through the relationship variables, the electronics industry data set displayed some direct relationship as well as relationships through the relationship variables. The findings of this research indicate that price pressure and good overall supplier-OEM relationship can coexist if managers take steps to maintain good supplier-OEM relationship.

Preserving the Supplier-OEM Relationship Under Price Pressure: An Abstract

Suppliers to original equipment manufacturers (OEMs), very frequently, dislike price reduction pressure exerted on them by their OEMs. Yet, the practice of using price pressure on suppliers continues in numerous industries throughout the world. In spite of the popularity of adversarial price pressure in procurement, several OEMs have adopted more cooperative and less adversarial approaches driven by the belief that price pressure on suppliers will be detrimental to good working relationship. The competitive benefits of cooperation are attractive in the modern business world of fast moving supply chains and seamlessly integrated intercorporate links. At the same time, the cost-reduction capability of potentially antagonistic relations such as adversarial price reduction pressure on suppliers and the resulting competitive cost advantage to OEMs cannot be ignored. This study seeks to find out whether OEM demands for price cuts necessarily result in poor supplier-customer relationship and whether good supplier-OEM relationship can be preserved while the OEM is making price reduction demands on its supplier. A research framework consisting of a construct representing overall supplier-OEM relationship, a set of relationship constructs, and a construct representing OEM price reduction pressure is developed. After following a rigorous scale development procedure, data are collected from suppliers in the automobile light vehicle industry and in the oil-refining equipment and related services industry. The results of structural equation analysis and the application of other confirmatory factor analytic techniques indicate that the absence of OEM price reduction pressure is not a necessary condition for good supplier-OEM relationship. Good supplier-OEM relationship can be preserved if OEM price reduction pressure is accompanied by suitable and supportive managerial actions. The relationships among the constructs in the structural equation models display notable similarities as well as differences.

Relationship Management Amidst OEM Demands for Supplier Price Cuts: A Cross-Industry Study

Original equipment manufacturers (OEMs) often seek price cuts from their suppliers through an adversarial approach. At the same time, other OEMs have adopted a cooperative approach based on the belief that adversarial tactics will damage the possibility of good supplier–OEM working relationship. While price cuts can obviously improve OEM profitability in certain situations, researchers have also recognized the competitive advantages that can be gained through cooperation with suppliers. This research seeks to find out whether supplier–OEM relationships are adversely affected by OEM demand for price cuts. It seeks to find out whether demands for price concessions can coexist with good supplier–OEM relationships. A research model incorporating relationship constructs as well as a construct representing price pressure and another representing overall relations between the OEM and its supplier is tested using data collected from suppliers in three different industries. Structural equation modeling and analysis lead to the conclusion that price pressure can coexist with good relationships as long as OEMs and their suppliers take the managerial actions required for the maintenance of good working relationships. The general pattern of relationships among the research constructs was found to be substantially similar in the three industries, although cross-industry differences were observed.

Differential Impact of Price Demands in B2B Relationships

Manufacturers in several industries frequently demand downward price adjustments from their suppliers. While such “unpopular” tactics can often deliver cost benefits to manufacturers, they are also viewed by many as being detrimental to quality supplier–customer working relationship. In this study, the researchers seek to find out whether such downward price pressure can co-exist with good supplier–customer relationship. A model of supplier–customer relationships with price pressure built into it was assessed using responses collected as a part of ongoing research on multiple industrial markets in North America, Europe, and Asia. For the specific purposes of this research, data collected from suppliers to OEMs in the automobile industry and other select B2B markets were analyzed. Separate data sets collected from suppliers to manufacturers of heavy vehicles and from suppliers to manufacturers of light vehicles were used to test the multi-group stability of the structural relationships within the model. The results of this research indicated that price pressure and good relationships can coexist. The manner in which relationships are managed can overcome the possible adverse impact of price pressure. The above two data sets as well as similar data sets from other select B2B markets exhibited a largely similar pattern of relationships, although specific structural linkages varied in relative strength.