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Opportunities in Crisis: Identifying Underperforming Suppliers

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The life-changing effects of our new viral enemy compel us to contemplate what it all means, both personally and in our roles as business leaders. Personally, it has reminded many of how vulnerable we truly are, bringing about lifestyle adjustments to better manage health and wellness risks moving forward. For business leaders, many have been consumed by short-term negative impacts. Leaders should, however, also view this as an ideal time to look for long-term opportunities that will improve the health and wellness of their business.

Strengthening the Supply Chain

Supply chain improvements present a prime example. Virtually every leader that relies on suppliers has heard or said some form of “that supplier is not getting it done, but we’re too busy to risk changing them out right now.”  This temporary lull in business activity affords leaders an opportunity to identify alternatives to suppliers that regularly introduce pain points or unwanted disruptions when busy is the norm.

Devoting time (even while working remotely) to negotiating permanent fixes to historical quality issues, lead times, or administrative processes is almost guaranteed to generate long term business benefits when our economy returns to being one of the best in the history of the United States. A wise person once said, “don’t wait until the house is on fire to look up the fire department’s phone number.” This was a silly and casual comment, but one that holds great relevance when applied by business leaders.

Act on supplier issues now, not when business levels rise again and worsen the wounds that they have created.

Finding Weak Links in the Supply Chain

Those who agree with the notion that the current disruption presents an opportunity as much as it does a challenge may be wondering, “how do I start addressing supply chain issues amidst the chaos occurring around me?” Thankfully, the process can be relatively straightforward.

For those that maintain meticulous records and perhaps even supplier scorecards, step one is easy. Use your data to identify the first supply chain that you NEED to work on. Data-driven selections are important so that valuable time is not wasted in chasing down someone’s pet project and to ensure measurement of future state changes are enabled. Those without data-driven supplier measurements in place can still confer with their most experienced material planners and buyers for a qualitative review and prioritization of supplier issues that need to be addressed.

Next, leaders should spend time with their internal staff to thoroughly drill down to the root causes of each supplier pain point they are experiencing. Our many years of having these conversations have found that internal actions are almost always exacerbating the issues to some extent. Finding those internal challenges does not mean finding someone to blame and stopping efforts to find solutions. Identifying root causes create an avenue for corrective action, regardless of whether the cause is internally or externally originated.

For example, a common refrain of frustrated leaders is, “this supplier gives me poor service every time I need to expedite an order beyond standard lead time”). Find value in sentiments like this, as they set the stage for probing questions that will get to the heart of the issue. “What does poor service look like from them?” “What usually triggers the need to expedite the orders?” “How often does this happen and have any patterns been observed?

Having open and honest conversations like these with coworkers can be challenging. If not approached in the right manner or when a siloed environment is the norm, they can be perceived as adversarial and unproductive. Inviting an unbiased external third party to facilitate this part of the process can remove or mitigate potential conflict as well as accelerate engagement and alignment on what isn’t working and what can be done to make things better.

Seize this Supply Chain Improvement Opportunity

No one could have predicted the extent of disruption that all are presently coping with. We can predict, however, that leaders who wisely use this time to address the long-term health of their businesses and supply chains will emerge in a stronger position to claim the rewards of a rejuvenated economy. So, stay safe… and stay focused. Opportunity abounds.

Stay tuned for our next Opportunities in Crisis post where we will explore how to start negotiations once supplier-originated problems are identified and articulated.

Sharpen your supply chain assessment with deep external expertise. Contact The ProAction Group for a complimentary consultation.

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