In one of my latest webcast discussions, I had the honor of sitting with supply chain powerhouses such as Founder, CEO, and Host of Supply Chain Now, Scott Lutton; Co-Host and VP of Marketing at Supply Chain Now, Mary Kate Love; and none other than the John Wayne of global supply chain himself, Jake Barr: CEO of Blue World Supply Chain Consulting.
For this discussion, the four of us dove into some heavy-hitting topics in the supply chain world. In an era marked by geopolitical tensions, environmental concerns, and economic fluctuations, it’s undisputed that the resilience and efficiency of supply chains is being put to the test more than ever. Let’s recap why that is.
Withstanding the pressures of today’s global marketplace
If you’ve chosen a career in the supply chain world, you know disruption is to be expected in any operation and in any vertical. As such, how do we position ourselves to become proactive versus reactive, before the, ahem, stuff hits the fan? Mary Kate posed some questions leaders should be asking themselves:
- Does my operation have visibility? If not, how do we get it?
- How confident are we in our suppliers?
- How efficient are our purpose-built solutions to solve problems as they arise?
Answering these questions requires us to examine the supply chain landscape, which looks very different from even just a few years ago. The COVID phenomenon of consumers not being able to find toilet paper was just one example of how supply chain stability impacts the everyday citizen. The pandemic caused global operations to reexamine their processes and networks, improve, and think of new ways to do things. But, now that we’ve crossed over the proverbial bridge, the outlook for the industry should be looking brighter, right? That might not be the case.
“The volatility across multiple portions of the end-to-end network is getting worse. It’s not getting better,” Jake stated. And if that’s the case, last-second band-aid solutions won’t cut it anymore for long-term supply chain stability.
We need to build our leadership teams to plug the holes we see arising on the shop floors. But how do we continue to improve our systems and facilitate long-term change when change is such a difficult beast?
Steps to build strong relationships in the external supply chain
Discussing these challenges brought us to the inevitable: Now what? What are our calls-to-action to become more agile and anti-fragile (thanks for the term, Scott!) in these times of uncertainty?
Jake suggested taking inventory of the supplier base you have and determining which are strategically vital and work well within your supplier network. However, a common problem with this so-called supplier base audit is that many companies don’t even have solid metrics in place to assess performance effectively.
What do you know about your suppliers’ tendencies in the last 90 or 120 days in terms of providing capacity for your external supply chain? Are any of them causing additional negative variability? Jake pointed out that these are answers you need to know, so that leaders can identify key players to contractually commit to – or not commit to.
Jake also recommends assessing the operational and executional capabilities of suppliers before buying from them. “One person can give me the lowest price of something, but always be late. Another person can give me a couple of cents off, but actually hits like a drum beat,” he explained.
What takes priority in your company? Who can you count on for commitment? You must be able to quantify and measure performance for comparative analysis. Once you’ve got your key players established, it’s all about building those relationships so that they’re long-term, sustainable, and working to nourish the overall ecosystem.
It’s also important to note that contract manufacturing accounts for about 30% of the average brand’s production. That’s significant! Leaders can’t afford to forget to focus on how one-third of their business, the external supply chain, is operating. Are you communicating through emails? Through solution-driven portals? Or the dreaded, but oh-so-common, spreadsheet setups?
Change management: To keep the spreadsheets or to not? That is the question
Most companies start to ask the above question at hand-off points to their suppliers and partners. During the discussion, we couldn’t stress enough how important these hand-offs are for overall efficiency. Mary Kate pointed out that if a company masters the ability to interoperate, integrate, and collaborate with players both inside and outside of their organization, they can excel.
But can you do that with emails and Excel spreadsheets? While it may feel comfortable and safe, reliance on spreadsheets may actually be creating volatility for your suppliers. Plus, it isn’t sustainable and eventually organizations are bound to experience issues with quality, inventory and other functions.
The answer is to keep up with competition by implementing technology for better visibility that will ultimately drive performance through real-time data.
Mary Kate pointed out, “Those external third parties [need to be] integrated so that they function like they’re part of your supply chain. Because holding them out, all it does is increase the variability. And if people can’t find your product, they’re not going to buy it.”
Visibility in the new age: Say it loud enough for the people in the back
Visibility: we all want it. We want to partner with more suppliers and only the best suppliers. But we need to make sure we understand our network and how these new partners are going to affect us – and do this proactively. Building network visibility simply cannot be an afterthought: that’s why over the course of the discussion, we stressed the importance of capturing data in a way that effectively leverages it and enables companies to succeed through interoperating processes.
John Wayne – I mean Jake – pointed out, “Visibility, it can mean anything, right? What you have to be able to do is get it down concretely to… the actionable information that you’re going to use to drive up the process.” It’s at that point, based on those insights, that you can help customize your purpose-built solutions (like Nulogy, may I add) to begin executing change.
We concluded that human nature can be predictable in that it just doesn’t like change. So, instituting operational changes in a time of great uncertainty can be a scary proposition. But we encourage supply chain leaders out there to lean into this conundrum and remember that our jobs are to manage today’s transactions while also preparing the company to be successful in five, 10, and 20 years. You’ve got to advance the two strategies concurrently or you’re setting your future people up for failure.
For a deeper dive, I invite you to tune into our full discussion and find me on LinkedIn to join my tribe of supply chain superheroes. Until next time!
