Lets take a step back from breaking news and organizational anxiety. Robots are not yet lined up outside of your office door to replace you, virtual reality and artificial intelligence still cannot quickly expedite a late shipment, and Watson is more focused on the genome these days than overdue orders.
Yes, our profession is changing rapidly but let’s slows the roll a bit…at least for a few minutes. Time for a deep breath and a review of fundamentals that successful supply chain managers can do on a daily basis to keep their companies humming.
Goldilocks Suppliers
Too big? Too small? Just right! The focus of many supply managers is on key suppliers who provide a critical product or service, and receive a lot of money in return. These A listers deserve the attention that they get and often need to be micromanaged.
Yet, the 80% of remaining suppliers that can make or break your business are often minimized, ignored, or generally taken for granted. These foundational suppliers are critical to overall supply chain success. Choose these suppliers carefully and focus on supplier scale. A mega supplier might not have your best interest at heart and be tone deaf to your requirements. Yet, a supplier who is too small might not be able to keep up with you, signaling capacity and financial constraints.
Look for suppliers who share scale, values, and processes that can support your business today and in the future. Don’t discount the majority of suppliers who keep the lights on and the materials flowing. These are your backbone suppliers. Appreciate and nurture them carefully.
Beware the Sole Source
Those outside of the sometimes insular world of the supply chain often confuse the concepts of sole source and single source suppliers. A sole source is a one in which there is only one supplier for a particular product or service. A single source is the chosen supplier for a product or service where there may be many alternatives. Single source suppliers typically result in a stronger relationship and resulting positive supplier performance. Sole source suppliers add to supply chain risk.
Most supply chain sourcing strategies work to restrict or eliminate sole source suppliers because of their inherent risk. However, sole source suppliers permeate throughout the extended supply chain and become exposed only when they fail to perform. Sourcing strategies must be extended through the supplier tiers to identify sole source suppliers in the critical path. All sole source suppliers, no matter the tier, should be identified in supply chain risk profiles.
Embrace the Social Sciences
The impact of the social sciences on managing the supply chain is often overlooked and misunderstood. Basic economic theories such as the law of supply and demand impact cost and price analysis. Political actions in Washington and capitals around the world, impact the regulatory environment and global commerce. Sociological considerations impact consumer behavior and other societal trends.
Business leaders must be aware of the global developments that impact their businesses, their customers, their employees, and their suppliers. Understanding the influence of the social sciences on business is more than glancing at the morning headlines on your favorite portal. It means taking a deeper view of the fundamental issues that drive global commerce.
Let’s Be Frank
“Say it straight and it can’t come out crooked." These words, spoken by the president of a large supplier many years ago, were words of wisdom that formed the core of many subsequent supplier relationships. This supplier prided themselves on their honest and rapid communication around issues both good and bad. Get the problem out on the table as quickly as possible, bring the right people in to work out a solution, and move on to the next one. While this supplier encouraged a strong personal relationship, they were able to separate the people for the problems. Personalities did not get in the way of problem solving. Performance was excellent and relationships amicable.
Too many supply managers, and suppliers, are far too opaque in their communication. Some detest conflict, others don’t know how to share bad news. Still others take things far too personally. Practice fact base communication and frank discussion around all management issues. Problems don’t heal themselves and often metastasize. Solve them as quickly as you can.
Keep a Clean House
Finally, practice good business. We need to professionally and personally model the behaviors we expect to see from our suppliers. Your organization should meet their financial commitments, honor their agreements, be respectful of employees, customers, and suppliers, follow the law, be good corporate citizens and maintain high ethical standards.
So should you.
