Supply Chain Management – This calls for backup!

If we have learnt anything over the last few years it’s that we have no idea what’s around the corner in business. The need to be on the pulse at all times, and ready to adapt, change and shape-shift at any moment is vital in order to survive, and hopefully thrive. Of course, a global pandemic is rather a unique battle businesses have had to face, but nevertheless, it’s made all of us more aware of our ability to survive anything that comes our way. And so, it’s time to get organised and focus on the security of our business’ future.

Supply chains throughout the last couple of years have been disrupted beyond recognition, causing not just headaches for supply managers but causing some businesses to shut down completely. This means the task of curating a perfect collection of suppliers is more important than ever. So, if you have your favourite, most trusted supplier and work with them solely, it’s time to rethink! You need backups, or alternating suppliers you can call upon at all times to keep your business moving forward and keep it adaptable.

Price Positives

One of the brilliant things about working with a new supplier can be the opportunity to negotiate new and lower rates. If you work with the same supplier for many years, it can become very difficult to negotiate new rates and a rut begins. Of course long-term business relationships come with so many positives beyond pricing, but when you begin a new relationship, this should definitely be one of the points at the forefront of your mind. Suppliers may be keen to offer great rates to win your business. So, if they can meet your unit costs, time to get negotiating! This may then also open up a conversation with your main supplier to discuss costs again too. A team of suppliers always proves a cost-effective solution for businesses, so get talking money!

Ready to take centre stage     

Even though you may be initially looking at a new supplier as a backup, you need to know they can handle anything you may send their way! Can they scale up? Are they able to handle a larger, more frequent production load should you request it? Of course they may say yes to any questions of this sort, so this relies quite heavily on your research, Visit their operating facilities where you can, get to know the ins and outs of how they work, how big their team is and what their current workload entails. You need to examine their existing standards, processes and requirements thoroughly to interpret how you would fit into their picture, and they into yours.

Critical Research

Of course you’re not going to start working with a new supplier without conducting thorough research, as mentioned above. However, one of the highly important aspects of deciding whether to create a new relationship with a supplier is performing a credit and risk analysis. Part of this research can be looking into whether they work with a competitor of yours, and so a conflict of interest may be present. Knowing from the off whether they work with someone else in your industry you consider to be a competitor is quite often a deciding factor, and if it isn’t, they need to be able to confirm and lay down exactly why it wouldn’t be an issue going forwards. Ask your potential new supplier for a list of existing clients or vendors and be sure to be confident in your credit and risk analysis before allowing conversations to go further.

Location, location, location!

Okay, but where is this supplier you’ve found? Are you away of all of the import costs, tariffs and laws or regulations where they are based and how that work coherently with where you are also based? This may pose problems, or increase costs. You may also raise concerns about the political or economic stability of their geography. Remember, the reason you are looking into a backup supplier, is to create stability for the long term with your business, so you need to be confident that this supplier is going to be there for the long haul. On the flip side, it may prove useful to have this backup supplier in a different part of the world than your others, to balance off any issues you may face with them!

Quality

Of course, having one sole supplier for your business ensures you have consistent quality at all times with all of your products. This is often the biggest reason for many businesses sticking with the same. And so, you need to be sure your backup supplier can ensure you get the same quality, every time. On the other hand, you may find that your backup supplier is then able to surpass this quality and improve your offering, creating quality competition between your supplier pool. Just like they will compete to bring prices down, they will compete to keep quality high!

And that’s the thing with a backup supplier. You want balance. This is about balancing the costs, the requirements, the quality, the potential risks, and the overall efficiency of your business. Create competition within your pool of suppliers for a better price and better service. Mitigate disruptions and create a smooth workflow that is continuous, no matter what comes your way.