A manufacturing supply chain incorporates a variety (hundreds in some cases), of companies and organisations that all have a role to play in ensuring that a product is manufactured and delivered to the end user. In the modern manufacturing world this has made supply chain partnerships increasingly key.
Supply chains have come under increased pressure in recent years with a plethora of challenges, from ongoing global conflict to the COVID pandemic. Therefore, to ensure security and resilience, it is essential for manufacturers to build partnerships within their supply chains, making them collaborative and cooperative, rather than merely a business transaction.
One sector that feels supply chain pressure more than most is food and beverage. Increased demand, changing consumer habits, tougher legislation, rising costs and the impact of climate change on the growth and delivery of raw materials, has seen many in the sector feel the pinch in recent years. Even the cost of basic commodities such as sugar, eggs, and milk have soared over the past year, due to a combination of disruptions, extreme weather and disease outbreaks.
It’s good to talk
The cornerstone of stronger, more dependable, resilient supply chains is conversation. As supply chains are tightening and pressures are growing, it is more important than ever that suppliers and growers are seen as true partners, not just costs to be managed. The supply chain is an extension of the end product, the business and the brand itself.
The challenges thrown at the sector in recent years have threatened food security, climate commitments and organic supply. The sector is fully aware that consumers value British produce and has made a promise that 50% of public sector food procurement will be British sourced. However, this will make scarcity a real issue for those working across the more publicly available supply chain. Therefore, it’s time for food and beverage manufacturers to get closer to what’s happening up and down their value chain and to get to know where the alternatives might be.
Any supply chain is only as strong as its weakest link. And supporting those weaker elements will only be done through better communication. Research agency Grounded Research has been working closely with food and beverage organisations to enhance supply chain collaboration, trust and transparency.
Use cases
Last year, Alexia, a food manufacturer known for its line of all-natural, trans fat-free, premium frozen products, faced rising costs and were unsure of where to invest. “We spoke to their clients about some of the challenges, where they were going to be investing internally, and what their clients’ customers need from capital solutions,” said Clare Otridge, Market Research and Strategic Development Director, Grounded Research.
“This approach meant that Alexia could invest in their own business in ways that were helpful in forming stronger relationships with their clients. They could compete in areas that their competitors hadn’t identified, and it also meant they understood their customers’ customers much better.”
Trust is a key driver for Pret A Manger, which Grounded Research has also worked with; 62% of food manufacturers reported improved supplier relationships following Brexit-driven supply chain disruption. While that could be attributed to a level of trauma bonding, Clare also highlighted that it meant that trust and support were clear and obvious requirements in building strength within the supply chains.
“Pret wanted to know how they could help their suppliers, and they were able to get some really valuable insights that strengthened their partnerships. It was simple, but it was quite impactful. It meant that Pret could build a targeted list of priorities and respond to real supplier challenges, rather than just assuming what those challenges were. It also gave them a real demonstratable value in how they view their suppliers.”
Marks & Spencer (M&S) launched its Plan A initiative to transform the company into a net zero business across all operations by 2039/40. Grounded Research worked closely with the company to get a better understanding of its suppliers, how it could achieve more transparent communications and work more collaboratively to achieve some of the sustainability goals that have been set.
“With greater scrutiny on traceability, risk, quality standards and targets, it meant that their communications and transparency had to be two-way. This in turn meant that suppliers felt more confident about sharing their concerns without fears of reprisals”, continued Clare.
She added that when it comes to collaboration, trust and transparency, early engagement is vital (not just within an individual’s role and those adjacent to them, but to gain a real oversight of everything that’s happening in the supply chain). The food industry in particular is extremely fast moving, so it is important to know what’s coming further upstream.
Clare added: “By creating shared value in the supply chain, the whole model moves from a transactional relationship to something more meaningful, where everyone’s singing from the same hymn sheet.
“And the key is to keep talking. We’ve got some really challenging situations ahead and understanding exactly how they’re going to be impacting people, and where that impact might be hitting a business, will be vital.”
Trust
Strong supply chain relationships are built on trust, and trust is built on good communication, not contracts. The myriad challenges facing the food and beverage sector are evolving and impacting manufacturers’ ability to get the product out of the factory, meet customer requirements, deal with market volatility and fluctuations in the weather. Therefore, the way in which supply chains are managed has to evolve as well.
As mentioned previously, there are effectively two models of supply chains. The first is the historic approach to supply chain relationships which is very transactional, profit driven and quite short-term. These relationships are often quite fraught and inherently involve a lack of trust.
A newer model, which has been evolving over time, is partnership-based. It’s focused more on alignment of shared goals, a higher level of interdependence and longer-term commitment to address industry challenges. Clearly, trust is key to those relationships, however, from the point of view of communications, it is all too easy to default to what has gone before.
It is easy to talk the talk when it comes to partnership relationships, but that isn’t always manifested in reality, particularly in times of challenge, when companies tend to revert back to they’ve always known i.e., the old model of transactional communications. This is problematic as it creates a power play within supply chains that often result in a win/lose dynamic, which is not a great way of building a partnership.
So, what kind of communication works well in building relationships based on partnerships? How do we foster strong supply chain relationships in the long-term? A starting point for any relationship is two-way communications. Get the listening piece done right at the outset as, to understand each other’s priorities, we need context, open dialogue, two-way communication and mutual respect.
It is important to understand values as well as facts. It’s very easy in a transactional relationship to stick to the cold hard facts behind what’s going on. However, the details behind a partnership-based environment are much more nuanced – longer-term challenge mixed with short-term commercial pressures. Therefore, it is vital to have a good understanding of each other’s values and what’s driving decision making at any point. This means that the parties involved will be able to react in partnership, rather than one telling another what’s going to happen.
This requires an open dialogue that looks to the future. The parties involved need to ask what they are trying to achieve together. What are the actions that each will need to take as part of this supply chain partnership? And, what’s the success criteria for those actions, both in the long- and short-term? The most important element of communications in relationships is that it results in positive action and is reliable.
Reliability is one of the biggest killers of trust in communication, and if it is not consistent and empathetic, the discussion becomes really challenging. Agricultural PR and communications agency, Twig, has worked closely with First Milk, a dairy farmer cooperative of around 700 farmers spread across the UK, which has taken a partnership approach to working and placed it at the heart of what it does.
Philip Gibson, Twig’s Founder and Managing Director, commented: “First Milk has created long-term relationships with key strategic partners, which are very much focused on how to address industry challenges, rather than just delivering short-term commercial needs.
“They’ve also established a regenerative agriculture programme with their farmers, which is very much looking at how to address long-term needs. The way they’ve approached communication is very collaborative; looking at what’s going on at the farms and how that can be improved for the benefit of society, customers and the farmers themselves.”
Stock is rising
Ros Heathcote is the Founder of Borough Broth, a company manufacturing bone broth, a type of stock that is growing in popularity due to a variety of health benefits including digestive health, weight management, and muscle and bone growth.
From starting the company from her own kitchen, Ros has scaled three times to the point where Borough Borth is now available in Sainsbury’s, Waitrose, Ocado and a number of independent outlets. In the last 12 months, the company has grown approximately 175% so scaling has been quite aggressive.
“We’ve got some strong values as a business”, said Ros. “We’re a member of the Soil Association and our products are organic. These are strict rules that I put on the business quite early on, but they pose their challenges with regards to supply chain. Only three per cent of agriculture in the UK is organic, for example, and that figure is not growing, despite an increase in demand.”
Borough Broth is also B Corp certified which is key for the company in maintaining relationships with its supply chain and is primarily only sourcing meat from the UK. The company is in constant, ongoing consultations with its suppliers to ensure that the relationship works for both parties.
“It’s a two-way relationship, and it’s always very open”, added Ros. “Ultimately, we have to adapt in our business, because there’s only so many farms and suppliers we can work with. They are all very different, depending on whether they’re a small farmer or an abattoir supplying a large supermarket.”
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