Strengthen Product Supplier Partnerships to Address Current Supply Chain Dynamics

Strengthen Product Supplier Partnerships

As supply chain constraints have shifted traditional buyer-focused procurement and supply-chain systems into being more supplier-focused, some procurement experts are calling 2022 “the year of the supplier.” Businesses today are facing pressure to diversify and localize their supplier base, putting manufacturers in a stronger position.

In this new landscape, companies are increasingly adopting a supplier relationship management (SRM) approach to create better working relationships. This mindset envisions the buyer-seller dynamic as an active partnership that can bring value to your company.

When correctly implemented, SRM creates a mutually beneficial relationship where your organization and its suppliers are working together to reach common goals. It helps supply chain managers ensure safety, security, compliance, and cost savings at all stages of the process.

To adopt an effective SRM approach, four strategies suggested by operations services provider Symplr include:

  • Learning about your suppliers
  • Educating them about your organization
  • Communicating and keeping them informed about the big picture
  • Setting clear expectations and KPIs and checking on them regularly

It also makes sense that in a world where companies are highly focused on managing how customers, employees, and the general public experience their brand, they extend that focus to the supplier experience as well. In today’s supplier-focused market, some companies are going beyond SRM to practice supplier experience management (SXM), which engages suppliers through many different components like bidding, information management, communication, insights, and support.

Organizations can improve the experience they offer to suppliers by creating an SXM road map, mapping out supplier journeys through your systems, designing a supplier communication plan, and adopting new digital solutions, among other steps, according to a recent article by global management consulting firm Kearney.

Ultimately, it’s no longer sufficient for companies and product suppliers to adopt distinct buyer and seller roles. In the new supply chain environment, both must be focused on developing authentic partnerships to succeed.

Dynamic stands ready to help you with this process and serve as a true strategic partner in your supply chain’s success. We acquire products only through OEM-authorized channels. Our expertise and connections with more than 800 technology providers can help your company realize supply chain savings and plan ahead for important events including product End of Life (EOL).

Learn more about Dynamic Technology Supply Chain Management solutions.

The Supply Chain’s People Problem: What It Means for Your Business

Supply Chain’s People Problem

In a recent report, CBS News noted that at the Port of Los Angeles, incoming cargo is straining warehouse capacity.  The number of containers waiting to be shipped inland has jumped from 9,000 to 35,000, and incoming cargo ships may soon be backed up in the harbor. The cause of this disruption is not wildfires, storms, geopolitical forces, or trade barriers, but rather a lack of railroad workers to haul containers out of the port. That’s just one problem in a single location, but it illustrates the fact that labor shortages have become a major source of continuing supply chain disruptions.

Supply chain labor shortages have made headlines throughout the COVID pandemic, and they were already in evidence long before the term “the Great Resignation” was coined. While COVID clearly made labor shortages worse, it’s not the only factor driving the problem. Waves of retiring baby boomers, a lack of critical technical talent, and the new expectations of younger workers have all made it difficult to recruit and retain the right people. And the problem is not going away soon.

Gaining More Resiliency While Reducing Vulnerability

The question is what can be done about it. Much of the problem is, of course, outside of any one company’s control. Manufacturers, for example, cannot solve their suppliers’ labor problems for them. But they can work to increase visibility into their partners’ operations to identify problems early on; keep the channels of communication with partners open; expand their supplier base to reduce reliance on a limited number of partners; and build robust risk management capabilities to make supply chains more resilient and less vulnerable to the labor shortages their partners might face.

There are also internal actions companies can take. Typically, much of the supply chain is in-house and performed by a company’s employees—and that reality should prompt companies to revisit their talent strategies. A recent study from the Pew Research Center, which looked at why people quit their jobs last year, offers some insights that can inform those efforts.

Pew found that less than one-third of the people who quit their jobs last year did so for COVID-related reasons. Instead, many pointed to low pay as a top reason, cited by about two-thirds of respondents. But workers also pointed to a range of other reasons, some of which could be addressed by targeted changes to company policies. For example, child-care issues were cited by nearly half of employees with young children, which suggests that daycare programs could be an advantage in the labor market. And more than 4 out of 10 respondents cited a lack of flexibility in work hours; here, companies might consider strategies such as flex time, job-sharing, and the use of digital technology to support more remote work.

“Soft” issues are also critical. About two-thirds of respondents said they quit because “they felt disrespected at work.”  Executives should take that to heart because they set the tone for a respectful company culture. They can back that up with training and clear career paths that demonstrate respect.

Overall, addressing the supply chain labor shortage is not just about higher pay, but also about how the company relates to employees and their lifestyles. There is no silver bullet solution available. Instead, companies will need to consider “all of the above” to create a clear employee value proposition that will enable companies to attract and retain the employees they need to keep their supply chains moving.  It’s a puzzle±but those companies that crack it will be in a better position to keep their supply chains running smoothly and efficiently.

Disruptions Make Supply Chain Risk Scoring an Essential Management Discipline

Knowing the Score

Supply chain disruption has unfortunately become something of a norm. The interconnected, time-sensitive, and global nature of today’s supply chains means that an event can quickly have a broad ripple effect. And there is a growing range of potential disruptive triggers out there, from product recalls to cyberattacks, political turmoil, and violent storms.

Supply chain disruptions can emerge quickly and unexpectedly. As McKinsey & Company noted, “Consider the sudden eruption of a long dormant volcano that disrupts a supplier you didn’t know was in your supply chain….” Predicting such scenarios “is likely impossible for even the most risk-conscious managers.”

But being unable to predict supply chain disruptions does not mean that you can’t prepare for them.

With the broad range of threats facing operations today, companies need to have a formal, structured approach to identifying, understanding, and managing supply chain risk. Developing a disciplined approach can be a daunting challenge—but it can be made easier with a risk-scoring assessment that uncovers the supply chain’s weak points and identifies where disruptions are likely to have the biggest impact.

A Self-Diagnostic Tool Designed to Measure Supply Chain Risk Exposure

Effective supply chain risk management must be as thorough as possible. For example, our Dynamic Supply Chain Risk Scoring methodology provides a rigorous process that includes an in-depth analysis of the Bill of Materials (BOM) for products and the supply chains associated with each material. It evaluates supply chains across a set of major risk categories, based on Failure Mode and Effects Analysis (FEMA).

For example, it identifies problems such as:

  • Rigid or overly specialized component specifications that can limit the ability to adjust to supply chain disruptions.
  • Over-reliance on custom products and the limited number of suppliers that can provide those products.
  • Lack of visibility into the lifecycle and likely end-of-life dates for key components.
  • Insufficient inventory buffers that increase the risk of supply stockouts.

After identifying any weaknesses and vulnerabilities, Dynamic’s methodology ranks and prioritizes specific risks based on the likelihood of a potential disruption and the level of financial, reputational, and operational harm it might cause. Armed with that prioritized list, supply chain managers can allocate resources to target their top threats and move proactively to mitigate potential risks—modifying sourcing strategies to spread risk across more suppliers, for example, or stocking up on or finding alternatives for components that are reaching the end of their life. Over time, they can use the assessment as a guide to re-evaluating specific risks as conditions change.

When performed correctly, a risk evaluation and scoring effort is of significant undertaking. It can take several weeks to complete and involves responding to dozens of detailed questions. But the task is well worth the time that’s required.

To provide insight into the range of risks that should be covered, Dynamic offers a complimentary self-diagnosis checklist consisting of 10 questions that companies can use to quickly gain initial insights into their level of supply chain exposure, and better understand how a full risk-scoring effort could help them.

In today’s environment, companies can’t predict where the next supply chain disruption will be coming from. But they can build and strengthen their risk management capabilities and make their supply chains more resilient. A thorough risk-scoring initiative can be a powerful first step in the effort to take a more comprehensive, disciplined approach to managing supply chain risk.