Supply Chain Management Solutions: Developing Your Supply Base
By: Clint McCrystal – Team Leader – Operations
Everyone remembers the classic product from years ago that featured those juicy-looking rotisserie concoctions and that snappy catch-phrase, “Set-It-And-Forget-It.” The inventor, Ron Popeil, was definitely on to something with the idea that an appliance that you could walk away from during the job could appeal to users that would rather spend their time working on another task. Unfortunately, those looking for implementing the best in supply chain management solutions won’t find that strategy on the menu.
Although companies that form partnerships with high-performing third party logistics providers do have the luxury of entrusting much of their supply chain operations to someone that specializes in this arena, these customers would be advised not to limit their engagement with the different stakeholders in the process. Furthermore, the third party logistics providers, themselves, must not get so wrapped up in new analytics projects, implementations and network design that they forget about the building block processes that form the foundations of their logistics services. This is especially critical in interactions and support with the supply base. After working with suppliers within the scope of our third party logistics operations at LeanCor, it is clear to me that supplier development is a key component to offering successful supply chain management solutions.
Many leading companies looking for supply chain management solutions in industries such as consumer products, electronics and automotive have hundreds if not thousands of suppliers. Learning their idiosyncrasies and constraints is just the tip of the iceberg in the usually intensive implementation phases that accompany a new supply chain management solution, whether it be with the conveyance of a modified logistics plan for the supplier to follow or simply transitioning the supply base to a new online shipping portal.
Once the suppliers are “on board” the new platform/process, the natural response is to move on from those basic stages and start to tackle bigger and better initiatives. A failure to revisit the fundamentals over time and play-out teaching opportunities when they present themselves will make the ever-present logistical fire-fighting burn out of control.
In thermodynamics, entropy is a term used in describing the way that a system moves towards disorder. On a broader note this reflects the idea that systems don’t stay in any one condition naturally, but move towards a more chaotic one. I think there is a very real comparison to be drawn here with the various elements of a supply chain network, and suppliers are a chief component of that.
In order to address the importance of having a strong supply base in the implementation, sustaining and developing of successful supply chain management solutions for one of our customers, my operations account team has been trying to focus on the below strategies and practices:
- Articulating Purpose – Whether or not the suppliers buy-in to the processes that we are asking them to adopt is a major indicator of their future success in improving the customer’s network going forward. To promote this we try to articulate the purpose of the new processes, the supplier’s role within the supply chain initiative, the need for good communication and the overall value added activities that they will benefit from. As lean practitioners, it is our responsibility to promote purpose.
- Logging Supplier Development Opportunities – The nature of daily issues handling is to fix the surface-level problem at hand and move on. As a result of this mentality, many learning opportunities and solutions to chronic issues can be lost or missed. We make a point of identifying supplier-related issues throughout the day that may be systemic and log these as supplier development opportunities. This allows a format or context for team-members to follow-up with suppliers in an effort to sustain on-going supplier development. Documenting these situations and problem solving with suppliers allows for very productive improvements to the network.
- Over-Communicate Process Updates – In order to give the supply base the best chance to succeed, it is the duty of the supply chain managers and logistics providers to communicate any changes to static plans and expectations to them. As a result, we have created several different processes that include email tools designed to update suppliers to the changes in concise and visually descript ways.
- PDCA with the Suppliers and Customers Together – In the event of chronic problems with a supplier or big change initiatives we have found very positive results in check-adjusting with both the supplier and customer contacts via phone conversations and web demonstrations. The key success factor in these conversations is that this provides a direct format for all parties to address expectations, gaps and idiosyncrasies regarding the problem or process at hand.
Not all supply chain management solutions will be easy for the supply base in the beginning. Most of these involve road-maps and long-term thinking that include some growing pains. This is not unlike the partnerships for some of the leaders in other industries. For instance, Jeffrey K. Liker includes a whole chapter in his book, The Toyota Way, on the need for strong partnerships as one of the Toyota’s business principles. The 17th chapter’s title sums it up perfectly: “Principle 11: Respect Your Extended Network of Partners and Suppliers by Challenging Them and Helping Them Improve.” If an elite lean company like Toyota values this concept, it must be worthwhile.
Developing the supply base is an investment that will pay off in the later stage projects and goals of supply chain management solutions. It is a key piece in preventing small issues from turning into large problems for logistics team members. On-going supplier development, communication, PDCA and articulation of purpose are success factors that will help keep the supply base aligned with the continuous advancement of any customer’s network.
So when your customer thinks that you’ve done all that you can with their supply base, you can use one of Ron Popeil’s favorite phrases, “But wait, there’s more!”Share