Wednesday, 29 August 2012

People make Supply Chains

A slight diversion away from Investment Stream Mapping (ISM)...

Supply Chain Management: a chain of companies, suppliers, firms that provide supplies to you and that requires Management.

Now that term management includes, but doesn’t mean:

  •             The transmission of electronic data on demand, stock and replenishment orders
  •             The despatch, transport and receipt of those of orders
  •             The production of orders, goods receipt notes, invoices and payments
  •             Negotiating and signing supply contracts, quality agreements

What is missing in all of those is the absence of management, which is a people based activity, and is frequently overlooked when we get all hooked up in those transactional statements.

When the Japanese natural disaster hit global supply chains, one of my clients found that the integrity of part of their supply chain was dependent on the strength of the relationship his Purchasing Manager had with a key supplier. In times of short supply, relationships make the difference. Contracts can be interpreted, reasons for non-supply can be created, delays justified. You and your key supplies depend on the people that you are in business with. 

Another client had a multi-million dollar supply contract with just one customer (60%+ of their turnover). They rarely visited that customer at a senior level. The relationship deteriorated, and decisions on future collaborations slipped away. All of those transactional things were happening of course, but the Supply Chain wasn’t being managed.

Don’t fall into the same trap. List out your most important Supply Chains (up and down stream), and ask yourself if you are managing the relationships as well as shipping the paper, emails and goods. Look for the people behind the chain and make sure you are in the game.

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