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The process for employee recruitment and development must be improved and positively offered to employees. A job must be an opportunity both to learn and to earn. Surveys have always found that people like their jobs when they accomplish something in them. Sustained accomplishments are produced through continual learning. Therefore, crossfunctional training, skills development, and empowerment must be provided to employees. Contrary to the general understanding that innovation involves designing expensive products, innovation can occur at every process and by every employee. Given the right circumstances, every employee has a potential to become an inventor. Many times, innovation is born out of production employees, who are immersed in their jobs 8 hours or more per day. As Bob Galvin said, it is important to use the brains of all employees not just those of managers. He recognized the potential of human beings. Many people working in the production area are leaders in their community or experts in other areas. On the other hand, many of the managers recognized at work for their performance are intellectually inactive outside of work. Innovation is a discovery process that requires broad experience, a purpose for applying cross-discipline experience, and encouragement for new ideas. Companies encourage innovation at different stages, such as having a suggestion box, developing a solution at work to improve a process or product, applying for a technical or engineering award, and applying for or receiving a patent. Companies encourage innovation by rewarding employees for publishing articles in magazines, presenting at conferences, speaking at professional associations, participating in standards bodies, teaching at local colleges, recognizing innovation in front of corporate executives, and even sharing gains or savings. Successful companies, both small and large, encourage employees total participation at work to bring out their best. Many small companies enlist employees ideas and do well, while many larger companies, due to their bureaucracy, stifle employees creativity and lose business. In future organizations, better, faster, and less expensive solutions and an aggressive rate of improvement will be realities that can only
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CHAPTER FOUR
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be realized through the intellectual involvement of employees. The learning organization will have a strong competitive advantage in all aspects of business. Such organizations will actually achieve better profit margins, because new products or services command a premium price in the marketplace.
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4. PURCHASING AND SUPPLIER MANAGEMENT
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In manufacturing, about one-third of the cost of providing products or services is attributed to the costs of materials. In service industries, person-hours are a significant cost factor. Every company has a purchasing process and works with suppliers. Companies are always trying to reduce the cost of purchases. Large corporations have annual price reduction targets with which smaller suppliers have to work. The result These large corporations are promoting the cheapest products or services instead of innovative and good products or services. In the supply chain, a business must look into the total cost of a purchase instead of just the initial purchase price. This current approach to buy the cheapest products has caused many suppliers to take shortcuts in operations. Such shortcuts generally lead to a higher defect rate for their customers and increased paperwork to correct the problem. Many industries relocate globally in search of cheap labor. The whole mind-set of cheap labor, however, does not necessarily bring value, whether in the area of hardware or software. Companies seeking such cheap labor often overlook other costs incurred by challenging geopolitical issues in developing nations. To optimize the purchasing process and the associated costs, relationships with key suppliers must be managed well. Managing suppliers performance includes understanding the suppliers capability, resources, ability to rapidly adjust to changing demands, willingness to innovate during product development, and commitment to an aggressive rate of improvement. With current outsourcing trends and increased dependency on suppliers, a company s capability is only as good as that of its weakest supplier. One weak supplier somewhere can become a bottleneck in the entire supply chain.
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