Ever on the lookout for relevant supply chain issues, we recently found an article by the Supply Chain Edge (a consulting group): “The Five Main Supply Chain Challenges Companies Face Today”. Because Proficient Sourcing is positioned to deal with many such issues—and deliver solutions, we wish to ensure we keep up with current supply chain thinking in order to respond accordingly.
The 5 problems discussion included this: “… small and midsize companies need to create a robust risk mitigation plan that addresses some of the most common and critical supply chain-related risks including supplier quality and performance, commodity price volatility, more complicated product and service mix, lack of visibility to outsourced operations and relationships, inadequate physical distribution infrastructures, and volatile transportation costs—just to name a few”.
We have often commented on the Kraljic Model as a useful tool to deal with these sorts of issues, and 2 such articles are here: Kraljic 3/26/14 and Kraljic 11/6/15. In its most simple form, the notion here is prioritizing suppliers and how you deal with each.
Further, “As more technologies, processes and “red tape” continue to be layered onto their operations, companies increase their costs of doing business and create confusion about what must be done to realize the corporate objectives and vision. This is especially true of companies with multiple business or operating units. Companies must be vigilant about finding and stamping out unnecessary complexity wherever it exists—for instance, identifying ways business or operating units can share common processes and technology platforms, or having suppliers provide a “reverse report card” that grades the companies they work with on how easy it is to do business with them and illuminates areas that could be streamlined.
“In most companies today, suppliers are key extensions of the business model and play an important role in enabling companies to meet customer demands. That’s why it’s critical for companies to know the full range of capabilities and offerings suppliers can bring to the table, as well as any shortcomings among suppliers that could disrupt the business. The last thing a company wants to do is promise customers an increase in response time or the launch of desired new products without being sure key suppliers can support those initiatives. When selecting new suppliers, companies should be rigorous in evaluating all aspects of suppliers’ business (including financial stability and how well suppliers’ cultures mesh with their own). But the work shouldn’t stop there. Companies should conduct regular audits and assessments on an ongoing basis to make sure suppliers are keeping pace with their business”.
We at Proficient Sourcing are big fans of visits, both to the supplier and having the supplier visit you. In a sophisticated supplier relationship we believe you want a supplier very interested in doing everything possible to bring value. And a good way to do that is encouraging the supplier to recommend improvements. After all, they are likely the expert in the processes they use.
Another related point is to be sure you know the supplier’s capacity situation. You know what your future plans might require, and if you do not investigate the supplier’s ability to respond appropriately, you may find yourself in an unnecessary problem situation later.
These are but a few comments concerned with a thought provoking article from Supply Chain Edge’s 4/4/13 article “The Five Main Supply Chain Challenges Companies Face Today” The URL is: https://www.supplychainedge.com/the-edge-blog/the-five-main-supply-chain-challenges-companies-face-today/