Office Depot’s Nigel Crunden highlights how anticipating risk and potential break-downs are key to meeting demand and enhancing customer relationships – key elements of ensuring growth at a time when competition is arguably fiercer than ever.
With the economy in gradual recovery, manufacturers are more aware than ever of the need for every aspect of their operations to support growth, not least the supply chain.
Understanding potential risks comes from maintaining constant visibility throughout the length of the supply chain, consolidating the number of suppliers used and ensuring that exchanges are rooted in strong relationships.
When combined, not only do these attributes help maintain a competitive advantage, but also drive long-term partnerships and growth in innovation.
While these statements are useful, it is necessary to drill down to exactly how this can be achieved on the ground:
- Ensure appropriate checks and measures are in place throughout the supply chain
- Select clear key performance indicators (KPIs) from the outset and ensure these are adhered to by partners
- Put a robust system in place that allows these KPIs to be regularly monitored
- The time spent monitoring each supplier should fall in line with the value of an individual contract
Understanding is as important as visibility, as the activities of the second and third tier vendors used by each supplier cannot simply be ignored. Buyers have a responsibility for monitoring these to ensure that stringent health & safety, as well as employment laws are adhered to. Ignorance is the enemy when it comes to supply chain visibility so buyers must make it their responsibility to audit their supplier networks to minimise the risk of unlawful practices.
It is vital, therefore, not to over-complicate the supply chain by working with too many suppliers, all of whom might not be able to be realistically checked. Consolidating the number of suppliers used is therefore advisable – not only do those that provide more categories of products and services offer economies of scale in line with order volumes, but buyer are more likely to get consistent levels of service from fewer suppliers.
Of course, the selection of suppliers should be squarely based on key criteria, with quality, as well as cost being top of the considerations list. Naturally, where high volumes of supply are required, multi-sourcing models are necessary – there are only a few incidences when single-sourcing models are used, and of course, these are easier to maintain in terms of checks and visibility.
Finally, to cement the strong relationships required for supply chains to operate as effectively as possible, it is vital that there is close collaboration between buyers and their suppliers. This means that there must be a degree of trust between parties, as confidential information often needs to be exchanged in order to feed a deeper understanding of mutual needs.
However, parties can protect ownership of key data when backed up by a non-disclosure agreement, putting a guarantee in place to allow this kind of activity to continue freely. Therefore, this exchange must run parallel with in-built flexibility within agreements that anticipates issues that might arise and puts contingency or alternative arrangements in place to ensure flow isn’t interrupted.
It may be straightforward to put supply chain agreements in place and leave them to their own devices. However, backtracking once an issue arises is far more difficult than putting the right checks in place to address problems before they arise – and many have only discovered this through experience. It is therefore crucial that businesses take a consistent and detailed approach to supply chain management in order to properly take advantage of the ongoing upturn in the economy.