Cleaning up your supply chain: how to know which contacts to maintain

It’s easy to get comfortable with your supply chain relationships. And although those relationships are extremely important, rarely is this industry neutral. All the tiny moving parts affect each other and a snag in the cycle could be costly. For this reason, you need to evaluate the relationships you have in terms of what’s helping and what’s hurting.

Supply chain relationships can be the grease keeping your supply chain moving smoothly and steadily. But some of those relationships can be draining due to poor communication.

You know what they say: keep your friends close and your enemies closer. You need to understand the competition, as well as your partners’ competition. Those others in between? Well, they might be slowing you down.

But if you’ve ever been in a one-sided relationship, you know about give-and-take. Relationships mean different things to the different parties. And the middle position of the manufacturer, between buyer and seller, makes things even more complicated. Manufacturers, additionally, have to work hard in both buying and selling roles.

Your relationships should work to enhance service, delivery, quality, and communication. If your supplier is lacking in any of these, it’s time to start seeing other people.

And yes, it’s hard to break it off when things aren’t working. So, what do relationships mean on each end of a manufacturer’s supply chain?

One opinion is that “buyers are focused on sentiment, while sellers are focused on sales growth and profit margins.

But does emotion have a place in the connections businesses make? We’ve often heard doing business with friends is a bad idea. And basing huge decisions on the wellbeing of one partner over the whole chain can be damaging. Better to make new friends.

Relationships can often diminish the threat of competition. For buyers, it’s often a safety net, some comfort – goin’ steady. But for sellers, it might not be so exclusive. And although trust is nice, so are met expectations. For that reason, it can’t be one sided.

Relationships formed throughout the supply chain can greatly impact the decisions managers make. Some relationships matter more than costs. Other times, it’s hard to bite the bullet for one connection. That’s why communication of metrics and expectations is important. Businesses should recognize each others’ goals.

It’s cut and dry. “A requirement for businesses in the chain to understand each others’ business needs. The success for one partner means the success of the other.

Your relationships should work to enhance service, delivery, quality, and communication. If your supplier is lacking in any of these, it’s time to start seeing other people.

Quality

Your demands for speed and efficiency should not come at the cost of quality. If your supplier isn’t delivering products up to your standard, you’re wasting time and money trying to rectify the problem. The problem isn’t your standards; it’s your supplier’s standards. And it’s everyone’s problem.

Supplier/supply chain callout

There are 5 easy ways to find an international supplier, and grow your business. Read about them here.

Of course, low quality may mean high volume and easier replacements (quantity). But the distance between overseas suppliers, customers, and everything in between can cause delays, specifically due to transportation costs and communication barriers. Not to mention, the equity issues involved in low-cost labor abuses.

And what if the problem isn’t unique? Multiple defects could be extremely inconvenient for your entire supply chain.

Communication: partnerships & data silos

Yes, a partnership involves compromise and patience.

You have standards and should make them well-known. Compliance might not come right away or could fall victim to miscommunication. But that’s how relationships grow. It’s not advisable to nit pick and start cutting ties with your supplier whenever an issue arises. That will only keep you looking for some perfect, expensive seller that doesn’t exist.

Of course, long term partnerships can be very beneficial for both parties (all parties, really, considering the delays switching over could bring). Trust, understanding, expectations, mutual goals, and respect all help keep communication strong and the line moving.

With too much data flowing between the ends of the supply chain, silos are likely to build up. Data silos can prevent access to the much needed information to keep the chain swinging.

If your partners all agree on how to best satisfy the end-customer, you can identify certain metrics and maintain set goals, keeping communication open between links on the chain.

Supply chains are “drowning in data but starving for insights.” But how does this happen?

It happens when companies focus on the wrong data. It’s important to understand the metrics that will help your team work more efficiently while also satisfying the end-customer. If your partners all agree on how to best satisfy the end-customer, you can identify certain metrics and maintain set goals, keeping communication open between links on the chain. The IoT (Internet of Things) allows for businesses to share their metrics with one another, keeping productivity on track and transparent at all times.

That said, you should not confuse your supply chain partners with your customers. They’re pegs in the process and they share your end-goal. Therefore, a partnership does not involve an upper hand. If your supply chain isn’t on the same page, the process is likely to experience kinks.

Small and medium-sized manufacturing enterprises should develop operating strategies based on an appropriate balance between supply chain performance and risk; assess the probability and effects of potential threats to their supply chains; and maintain sufficient (though sometimes expensive) slack, redundancy, and flexibility to keep the potential threats at manageable levels.

Along with transparency between supply chain partners, it’s essential that customers are also kept in the loop. When service is accessible and responsive, you cut down on time and money while customer inquiries get delayed.

Service & servitization

Businesses evolve and so do their needs. Think about it: you have your needs and so do your partners in the chain. Supply chain managers therefore have a responsibility to direct decisions for the greater good of all parties involved. That sometimes means evolving without a contact or two.

By providing the end-customer with services and guarantees, you cut out the need and possibility for competition and third-party customer service solutions. Although it’s always nice to avoid customer complaints, it could be best to deal with your customer base directly.

Unless a solid process is in place, servitization can shorten the inconvenient trek between manufacturers and customers, while also giving the manufacturer an opportunity to strengthen their customer relationships and communications.

Delivery: performance & green

The goal is to keep things moving. That’s the bottom line: reliability. And it can cost you more to avoid risks that might never happen if only to ensure that movement.

Communication cannot be emphasized enough, especially when it comes to shipping. Times need to be monitored, maintained, and made transparent for both the supplier and the buyer. Additionally, managers should be responsive to concerns and questions.

Delivery expectations are clear. If shipments aren’t fast, secure, or reliable enough, a new solution needs to be explored.

But let’s freeze the picture for a moment and consider something more immediately concerning: Efficiency. It refers to cost and time, but also waste.

Emission levels should greatly affect the decision process when considering shipping options. Is your supply chain conscious of its footprint?

Go green for green; environmental solutions cut emissions and cash.

When it comes to partnerships, especially the great tangle of supply chain links, assessing your metrics and the benefits of each connection should be very regular. Things can go downhill slowly.

They call it a “chain reaction” for a reason.

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