If your company has a supply network, you should be asking this very important question from your Procurement and Logistics functions: How are you collaborating with your partners?
It’s called a supply network, and the keyword here is network. You rely on your suppliers, they rely on their suppliers, and so on and so forth. It’s a necessary chain, but it’s also a risky chain. If one supplier goes down, it can have widespread ramifications.
So it’s essential that you can get some visibility into your supply chain and make sure your organization is doing everything it possibly can to stay on top of your network. And what’s one of the best ways to do this? Collaboration.
Here are 3 reasons your supply chain organization needs to have collaboration as one of their KPIs.
Business partner collaboration means the lines of communication are open. Can you expect to be the first call every time your supplier’s business is impacted in a way that might affect the goods and services they deliver to you? No, you can’t. (And that’s why you should make sure you’re actively monitoring this kind of thing.) But are you a lot more likely to be able to find out what you need to know if you’ve got collaborative relationships with these partners? Of course you are. Knowing your business partners and establishing open lines of communication is an absolute must.
The more information you have, and the sooner you have it, the better off you’re going to be. What if your procurement organization is getting signs that one of your suppliers might be headed toward financial insolvency? Perhaps they’ve missed some payrolls, or there’s been major management changes that suggest trouble is on the way. You need more information. And collaboration is how you get it. It’s time to use your open lines of communication to your advantage—ask for what you need to know. Does your procurement and supply chain organization have the tools they need to do that? Do they know what they should be asking in the first place? You better hope so.
What can you do with open lines of communication and more information? Easy: Act smarter. Take into account what you know—and what you don’t know—in all aspects of your procurement and supply chain functions. Consider the case mentioned earlier, of a supplier showing signs of financial insolvency. Do you have a plan in place for what to do if that supplier goes down? If not, now you know it’s time to establish one—before you actually need to put it in action. Whether it’s inquiring about troubling warning signs or directly responding to a catastrophe, collaboration is going to enable you to know more, know it sooner and make decisions based on it.
Bottom line: A collaborative supply network is going to make your business run better. Don’t isolate yourself from your business partners, and don’t let them isolate themselves. Make sure collaboration is one of your supply chain KPIs—it’ll make not only your supply network, but your entire business, more resilient.
Rolf is the co-founder and managing director of riskmethods. Got questions about how to stop supply chain risk from threatening your business? Drop us a line at om@riskmethods.net.
