Jeff LeClair declares that his business roots are firmly embedded in the Toyota Production System. He spent the early part of his career with Toyota and has carried the lessons he learned there with him throughout his 30-year business career as a manufacturing and supply chain executive—lessons about processes, but lessons, too, about the critical role of trust and collaboration across the supply chain.
Before taking on his current position of vice president of operations and supply chain for Basin Industries and president of SteelTech, he spent several years in supply chain management with Caterpillar. In all of his management roles, he says, he strives to focus on a total-cost value chain approach to reduce costs, improve stability, and create competitive advantage.
Basin Industries is an industrial manufacturing holding and operating company focused on acquiring, operating, and developing equipment and equipment components manufacturers in numerous heavy industrial markets worldwide. SteelTech is an industrial fabrication company specializing in high-volume customized racking and container solutions for automotive and industrial customers. LeClair spoke recently with Editorial Director Peter Bradley.
Q: You are a strong advocate of end-to-end supply chain collaborative processes. What do you mean by true collaboration in the supply chain and why is that important?
A: It really is about understanding what each other needs to be successful and providing that. Sometimes, customers don't know there are some better options or, I will say, better opportunities. These may be cheaper or they may be more expensive, but there are better ways of doing it. So, understanding is the first step. You can provide what they really need to be successful, and not just what they want.
I do believe customers will value your solution if they understand that you are, one, being truthful, and two, thinking about what makes them successful versus selling. Sometimes, selling is just saying yes and providing a product they really don't need or is really not right for them. Our value proposition actually delivers a lot more value for them in meeting their customer goals. It is not about always saying yes.
Q: Let me ask you to look back upstream. Give me your view of what collaboration means with your suppliers.
A: Well, the first step is developing a common understanding of what we need to be successful and how the supplier can help me. I share with my suppliers our customers' expectations, everything from leadtimes to bottom-line dollars. What I have done is use this "common goals" format, where I incorporate these key indicators in our metrics and they see exactly what I am doing. Then we have a review. I do this every quarter.
Just like a good employee or team member, you are really aware all the time and there are no surprises and you are working on it together. It is a cooperative venture versus saying, "Now give me a 5-percent reduction in price." I believe that common goals actually create a lot more value than just a price proposition. By doing this with our suppliers, you develop a long-term relationship and you develop a trust with your suppliers.
Q: How do you build trust with both your customers and your suppliers?
A: That is probably the hardest thing and yet the easiest thing—the hardest thing to start but the easiest thing to maintain once you have laid the foundation. You have to expose your weaknesses. As a supplier, the hardest thing to tell your potential or current customers is that you have a weakness and you need help. That could be anything from not meeting the customers' goals on timing to not having enough pieces to satisfy their demand. It could be that you can't deal with this cost and here are the reasons why. It puts you in a little bit of a vulnerable spot, certainly, and most people don't want to share their weaknesses.
The other side of it, however, once you do commit, you can then say to the customer "This is what I can do, and I can guarantee 100 percent success." You then have to deliver exactly what you committed to. I think the customers will value that because you're going to be delivering exactly what you said you would. There are no surprises. For the long term, the customer and the supplier both believe what you are saying because it is very transparent.
I will give you a comparison. I have several friends in Japan who are senior executives and many in the U.S. I ask them, "How do you balance your workload?" The Japanese typically will tell you they spend 50 to 75 percent of their time with the supply base because they see it as an extension of their business. And yet, you talk with some of my U.S. peers and they don't go out to (visit) their suppliers, because they don't see it as an extension of their business.
My goal is really to develop our suppliers to be part of the team, the big picture team. I can actually tell my customers that I know there is not going to be disruption in the supply chain for them because I have already committed and I have already received the same commitment out of my suppliers.
Q: How do you persuade suppliers and customers that are new to this approach?
A: Truthfully, in North America, this is a very difficult discussion. I do have these discussions all the time. I will just say that in my supply base, most of them are very reluctant. They are always protecting themselves because in their experience, other customers have only worried about one thing—short-term financials. So it is a very difficult discussion, but this change has to happen. It has to be initiated by me as a customer. So I have to take the first step by showing that I'm going to honor what I say to them. And I have had success doing that. Trust starts to be developed once they see that I am willing to take the first step and I'm not going to fire them over some small discrepancy and that I am willing to work with them to improve.
Q: So, maybe that first time they mess up and they are honest with you, you don't fire them but say, "OK, let's fix it ..."
A: Exactly. It's that step. I've had the opportunity in my latest role to start working with our suppliers, and I've offered to go out to see their facilities and learn more about their operations. I feel that it really helps my suppliers to see that I understand what issues and opportunities they're facing and then sit down with them and develop this "common goal" approach. We've had some really good successes. I can also share that a couple of suppliers don't believe in this. I understand their initial position, but the long-term success of our business is going to be based on that fundamental collaboration and trusting each other. I believe the long-term approach is best to develop strategic partnerships in business.
