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Balancing the E & the We of the Supply Chain

It was not many years ago when the countdown to the death of the bookstore was nearing zero. The print book was on the edge of extinction as it was reported everyone was in the process of converting to e-readers. Then a funny thing happened. Some readers liked print while others liked digital. Some actually liked both. Equilibrium was established and there is now a renaissance for bookstores. Readers can indeed have it both ways.

Those in supply management need to seek equilibrium as well. There is a way to maintain the human side of supplier relationships while leveraging the value that technology brings us. Those in the supply chain cannot hide behind anonymous e-commerce applications. Just how do we balance the “e” with the “we”?

In 1997, I was in graduate school working towards a master's degree in management. I had solid supply management career experience going into the program. When it was time to select a topic to explore for my thesis, I chose to research the impact of the Internet on supply chain management. More specifically, I wanted to look at the impact of this new technology on buyer-supplier relationships.

This was an exciting time as the Internet was just coming into its own…what we now call Web 1.0. The high-tech manufacturing company where I was employed at the time supported my efforts as they themselves were trying to figure out the impact of the web when working with their customers. An extensive survey within the supplier community, and many interviews with supply management experts, allowed me to come to an interesting conclusion:

Relationships on both the buyer and supplier sides are too important to sacrifice to technology. Leverage the technology to improve process and reduce costs but above all maintain the business relationship.

The conclusion is still valid a decade later. During the growth of technology in the supply chain sector, the idea of relationships have been under assault, driven in part by those who do not work with suppliers. Just look at the supplier relationship management module of many enterprise systems. Lots of focus on technology but not a lot of focus on relationships. In fact, human relationships are often simply ignored in the rush to digital nirvana.

An over reliance on technology, an abandonment of interpersonal skills and the fragmentation and decentralization of the supply management process has put many companies at risk. Rather than using technology to distance themselves from suppliers, supply chain professionals need to use these tools to enhance those very relationships. The fundamentals of business have not changed: collaborative relationships, clear expectations, and mutual goals.

Yet technology does have its place within today’s supply chain strategies. Roy Anderson, executive vice president of the Duluth, Georgia e-procurement company GoProcure, sees the importance of relationships being supported by technology. “Our company works to reduce the transaction cost of procurement between the buyer and the seller, and good things happen to that relationship once the process is automated,” said Anderson. “Transaction focused buyers are freed up to work on more strategic things like supplier relationships.”

According to Anderson, it works both ways. The supplier’s cost structure to the buyer improves, fostering a stronger relationship. “That allows for a higher level relationship that may include access to technical help or even new markets,” said Anderson. “In our case the e-commerce solution enhances the relationship.”

Equilibrium exists in nature and in economics. It needs to also exist in the supply chain as well. Go humans!

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