Bottle Up the Wrath
Given the extraordinary cost to flip EMS suppliers, it’s best to check your anger at the door.
Anyone who has worked in the corporate world may be familiar with this scenario: Something goes wrong on one side of an OEM-EMS relationship; perhaps it was production quality, or maybe just a miscommunication about an ECO; perhaps a forecast was revised and then revised again, but no one sent the second change to the rest of the supply chain; or a software glitch prevented a payment from going out within the term’s deadline. Humans are the conductors of business, and humans make mistakes. Usually mistakes are fixed, and everybody moves on. But this time the “higher ups” heard about it and a meeting has been called.
Stay with me. Some people at the meeting know what’s happening and others have no idea, adding to the tension in the room. Most people are quietly looking down at their notebooks, scribbling nonsense in an attempt to look busy. Whoever happens to be highest in the pecking order in that particular configuration stands up and starts yelling, red-faced with veins bulging, ensuring more drama and silence. Everyone feels extremely uncomfortable. The emotional demonstration is designed to psychologically beat down the offending party. Whoever made the mistake is silently plotting revenge.
Net result: Productivity for the month among this particular business team plummets. The relationship between the two organizations is damaged. Thoughts such as, Why do I put up with this? enter everyone’s minds, and workers plot exit strategies.
If you are George Patton leading the Third Army to the Battle of the Bulge, you are entitled to lose control and yell at people a bit. Yet even Patton had problems because of his temper. Civilized people just weren’t supposed to behave that way. Now many organizations reward that type of behavior, mistaking it for leadership. The media rewards the dutifully enraged with their own talk shows. In reality, it’s the Sixth Deadly Sin: Ira, or Wrath, and it costs money because people don’t respond well to terror tactics. Once, only the top managers were given the freedom to act wrathfully; now, up and down the command chain, people think it’s the way up the corporate ladder. Sadly, it often works. It was once thought that adding women (“the gentler sex”) to management ranks would improve the overall emotional climate – not so. Women can be just as vicious as men. In some organizations, the best way to get ahead is by criticizing your predecessor and staging pointless rage fests.
Besides the emotional toll, what is the cost of Wrath in the EMS-OEM relationship? When a relationship goes south, as we’ve explained in previous columns, it tends to spiral rapidly into a death cycle. The OEM quits communicating; the EMS service level drops; the OEM still doesn’t say anything; the EMS figures the account is lost anyway, so why try, and so forth. Not professional, you say? It’s human nature.
Here’s where the cost comes in. For OEMs, it is extremely expensive to change EMS suppliers; chances are the next supplier is not going to be substantially different in service levels or cost. For EMS firms, it is extremely expensive to find a new customer; chances are the next one is going to be as annoying as the one sitting across the table.
How much does it cost to change suppliers? On average, OEMs that outsource around $100 million annually spend approximately 12% dumping one EMS company and starting with another. In other words, the cost of Wrath for an OEM spending $100 million annually would be $12 million. For an OEM that outsources more, the cost would be a little less (i.e., economies of scale); if they outsource less, the curve goes up steeply. In fact, for spends of less than $5 million per year, the percentage is more than 40%, and considering the typical mid-sized EMS-OEM engagement lasts two to three years, it would be natural to wonder if outsourcing even makes sense.
So next time you send out a mass email meeting notice to “get to the bottom” of the “latest stupid supplier mistake,” etc. remember what’s at stake from a business and personal sense. Use whatever technique works to take a deep breath, and remember, no one’s life is at stake (hopefully), and it’s okay to calm down and deal with it tomorrow.
“This too shall pass away.” The story behind that phrase is attributed to Abraham Lincoln, who popularized it in a speech in 1859. He said it came from an Eastern sage, but later scholars say it was a Jewish proverb. The story says Solomon gave an impossible task to a man to get rid of him. The task was to find a ring he could wear to a festival that would make him happy when he was sad and sad when he was happy. The man came back offering a ring inscribed with the words “This too shall pass away.” Solomon immediately was humbled. At the time, he was at the top of his game, but realized one day he would pass away, as all things do, both good and bad. Especially in these trying times, we can all use a little of this wisdom in business relationships.
Jennifer Read is cofounder of Charlie Barnhart and Associates (charliebarnhart.com); jennifer@charliebarnhart.com.
