Suppliers are in a dilemma: their customers demand more and more from a service or product, but want to pay less for it. Some customers squeeze their suppliers. We notice that traditional, large clients believe that their future success is dependent upon squeezing the last 5% discount out of a deal. Sometimes we go along with this to give meaning to the adage “we stick together, since we’re in this together.” Sometimes, we don’t go along with it, and lose these customers.
We try to set an example in our relationship with our suppliers. I believe their role should drastically change, and that they should play more of a part in our organization. They will be more of a co-creator and partner of the social value network around our services. Within our meeting and congress centers, we no longer invest in matters such as sound equipment and audio/video projectors. Our supplier invests, installs, and services this equipment on-site, including the corresponding virtual information on our website. He no longer needs people who drive around all day delivering and collecting equipment. Thanks to our online reservation system, he is kept abreast of his sales or rentals directly via a Web feed. He can respond immediately to complaints or comments that are created through our review sites and our buzz monitoring. In short, as an organization, we are actually facilitating the connection between our customer and our supplier, without having to be the go-between, as still happens in the old value network. We’ve moved from value chain to value network. We determine sales prices with our suppliers and share the proceeds. By eliminating a series of costs, the prices can drop, and profits can rise. And, we achieve this without a contract, a service level agreement, or other paper monsters.
Of course, you may still need something like a confirmation letter every now and then. But, in essence, we work together on the basis of trust, and we point out each other’s responsibilities. Within our value network, we all have the same stake, after all. It is becoming increasingly more important for us to work with suppliers who understand this new game. This will bring in much more than anybody could by squeezing the last percentage points out of procurement deals, or breaking open, settled contracts.
Smart companies shift a part of their activities to the customer. At our Seats2Meet.com locations, sophisticated Internet solutions enable our customers to manage the entire logistic process around their events. So, we no longer need a separate department for that.
Customers design new constructions at Club Lego, so the Lego design department is history. This open-innovation phenomenon is called co-creating. In part three of this book, the topic will be discussed at length.