What does a sow and turkey farmer have in common? Answer ” a customer in the name of Sara Lee willing to provide them with two years of business so that their bankers would lend to them, according to this article from CFO.com. The credit crisis has placed many of Sara Lee’s strategic suppliers in dire straits. So instead of waiting for turnaround professionals to take over for their key suppliers, Sara Lee, led by Chief Supply Chain Officer George Chappelle, structured deals that its suppliers could bank on. Socked with falling consumer demand, a rise in fuel prices and feed corn and volatility for other key raw materials, Sara Lee recognized that one supplier can really change not just the availability of your product but the price of that project.
Consumer packaged goods may seem a far cry from automotive, industrial machinery or aerospace but the example is relevant. However, Dennis Cuneo, former Senior Vice President of Toyota Motor North America recently told the story of AK Steel at an OESA conference (Original Equipment Suppliers Association in which AK Steel specifically formed new relationships with raw material suppliers, to help turn around the company. But the notion of propping up a supplier seems anathema to the automotive industry, particularly when we read headlines like this one about American Axle and Manufacturing suing it’s supplier Republic Engineered Products.
Do you know of any industrial products company going out on a limb for a supplier? Drop us a line and let us know about it at lreisman (at) aptiumglobal (dot) com