It feels like there’s a new crisis every day affecting the supply chain. Whether it’s geo-political conflict, extreme pandemic responses clogging up ports in Shanghai or inflation, energy and fuel prices closer to home – it’s been a turbulent time for supply chain managers in 2022.
Do you have suppliers sending daily updates to their prices?
Is your supply chain pushing delivery times further and further back?
With everything that’s going on in the world right now, it’s easy to see why supply chains are stretched and suppliers feel that they have no option but to put up prices and delay delivery.
But you don’t have to just accept these challenges, and nor do you have to rip up your supply chain and start again…
Here’s how some of our customers are handling the unending disruption in their supply chains.
Get Under The Skin…
If we’re pragmatic, we can assume that no suppliers will want to put prices up and risk losing business or making customers unhappy or resentful. Equally, we can assume that suppliers don’t actively want to announce longer delivery times as it can hurt their cash flow and stifle their operational efficiency and business growth.
We could be cynical of course and see this as a profit grab based on favourable market conditions (such as stock holding) – but we’re not sure this is the case primarily.
So if we’re calm and rational about this change, the first thing to do is understand what’s driving it.
Decisions affecting time and money risk making your supplier uncompetitive these tough calls are only going to be made when they feel that they have no other choice. But have they truly explored all their options with you?
Your first action, when receiving “bad news” like this should be a supplier review.
This involves talking to the supplier, understanding their situation and delving into why they have made the decision that they have. We’ve found that having supplier data readily available makes this conversation far more transparent, unemotional and productive. Aligning your values and objectives makes for a collaborative solution where everyone works towards a goal. It doesn’t have to be a zero-sum game of winners and losers. You’ll be able to assess their openness to innovative solutions to the problem and having key supplier information at your fingertips allows informed, evidence-led decisions and honest conversations.
Change is the Only Constant
Having a review doesn’t mean kicking them when they’re down and threatening to remove your business unless they sharpen their pencil or conversely just taking the price and lead time hit yourself either.
Reviewing your relationship with a supplier might reveal opportunities to reduce or even negate the need to price or lead-time changes.
For example, consider:
- Changing the order quantity to take advantage of available stock or any bulk discounts;
- Changing the specifics of the order to a more readily available or less costly alternative;
- Changes to your programme of work to allow for staged delivery or longer lead times
Your supplier might be only too pleased to see their customer taking such a pragmatic, considered and responsible approach to their problems. It demonstrates empathy and fosters a much better working relationship. You may find that a little flexibility and perhaps one or two changes on your side of the relationship completely eradicate the need for budgetary changes.
Of course, agreeing on changes and actions is one thing, but for best practice, these conversations and new contractual or temporary measures should be recorded and saved in a central location. SourceDogg’s supplier relationship management platform does exactly this in the cloud so that everyone internally in your supply chain team and even the supplier themselves can reference them as needed.
The steps that you put in place with your supplier will help both parties to decide where to go next and provide the background for your next review meeting. Hopefully, one where your supplier is informing you that, with your help, their moment of crisis has passed and they can return to a more stable pricing and delivery situation.
Stick or Twist?
Although it may the last thing that you want to do, one option, when faced with supply challenges, is to seek an alternative.
This is where supply chain software like SourceDogg is invaluable to help turn supply chain data into decision-making insight. By having the supply base for this product or service mapped out, quantities, capacities, lead times, certifications and accreditations all in one place, you can assess the situation holistically and with confidence.
Have you already identified potential suppliers that could take all or part of the order?
Are there other suppliers that could meet your deadlines or budgetary constraints?
And could this be a temporary or permanent solution?
It may be a balance of acquiring new suppliers to fill in gaps or enhance the agility of your operation or you may be able to work around the supplier issues if supply is limited across the entire market – but the only way to truly know this is to use the power of data in your supply chain decision making.
When confronted by challenges from your supply chain, you have options. You don’t simply have to accept the new conditions.
A supplier review meeting may reveal measures that will mitigate the changes and possibly avoid them completely. And, you always have the option of changing suppliers albeit this can be a costly exercise and one that, dependent on the product or service being supplied can eat up a lot of time and money in people and processes. When this is combined with onboarding and quality checks as they get up to full speed it may not be a suitable direction. It’s about managing risks, short and long-term, and SourceDogg helps you identify these in the first instance.
None of this will be as quick or easy without access to supply chain information and a software platform that manages the process. A solution such as SourceDogg places your supply chain data at your disposal and facilitates transparent supplier review conversations.
The solution to your next supply chain crisis may be just a conversation away – we’d love that first conversation to be with SourceDogg to let us show you this process in action with a personalised demo.