Is anyone playing horsey with your Supply Chain?

With recent sorry stories in the UK and European media about adulterated beef containing Horsemeat, we return to the theme of people in the Supply Chain (see "People make Supply Chains" in this blog).

Do you trust your Suppliers?  If you don't then you have a problem, but first of all what do I expect from a trustworthy supplier? First on the list is that they send you what they have promised. I also expect honesty from them when they have problems affecting that supply. Does that mean they should tell me about every little twist and turn in their business or with their suppliers? No.

What you pay a supplier for is to manage those twists and turns, to solve their own problems. If you get involved then you might as well ask for a discount! However there is a fine line in solving your own problems and being up front with your customer when you have a serious supply issue.

In the last few weeks one if my clients has had to deal with one of their Suppliers that isn't delivering for them. I was involved, and my biggest problem was that I didn 't trust what they told us, the honesty had gone!

The Pharma industry has instituted Vendor Assurance, site audits and certificates to confirm supply identity. This is good and necessary, like self-inspections and keeping good fences with neighbours. But if you look in the eye of your supplier and don't trust them, that's the time to check for the Horse DNA!

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.