Refining Your Supply Chain, One Supplier at a Time

We have an abundance of forward thinkers in the supply chain world. It seems we have more consultants than implementers when it comes to dishing out advice on how to best manage the supply chain.

Further, advice comes from camps with differing strategies. One corner encourages us to remap the entire supply chain process to gain leverage. Another voice tells us to reduce the number of supply chain links so we can have better oversight and control, while yet another philosophy encourages us to totally rethink our entire supply chain methodology.

If that weren't enough, here is another voice -- but with a less stressful approach and a simple message: Refine and relax; match your supply chain with your real needs.

Most companies have spent years developing their supply chains and have built partnerships that serve their market needs well. If your business has not changed its primary model, your needs probably haven’t changed dramatically either. However, if changes have occured, a quick backward look to ask what drove the change is probably warranted. You may find that your management team has changed. Your cashflow may have changed. Your locations or geographic demands may have changed. Even your products or services could have changed. Yet, none of this necessarily dictates the monumental task of reinventing your entire supply chain methodology.

I suggest this approach: Refine and relax.

First, look at your supply partners one at a time and ask yourself the simple question: “Is this supplier adding enough value, or should I look for an alternative?” How do you determine if you're getting enough value? I use the age-old 80/20 principle: If you spend 80 percent of your time working with 20 percent of your suppliers, then the 20 percent obviously represent your target group ripe for refinement.

So, one way of defining value is by the amount of work you don't have to do yourself. Ask your supply partner to take on the problem with you. If it can’t or won’t, then it's really not providing you enough value, and it may well be time to move to someone else. If the problem cannot be solved by a new supplier, then it is time to consider how you can change the playing field.

As always, finding the balance between problems and profits is what we are paid to do. As an obvious example, many products with the best cost come from small manufacturers in Asia. There is the profit. But these manufacturers often have little domestic distribution support. And there's the problem. Finding a partner that will help you to manage the inherent headaches associated with this type of supply would be adding value and changing the playing field.

So, refine your supply chain. Consider consolidating these suppliers with a supply chain management partner that can capably manage the headaches of offshore suppliers and still deliver product -- and profits -- to you.

Then initiate my favorite strategy: Relax.