Written by: Robert Heiblim, Partner, bluesalve partners
Supply Chain Pains: Vendor Blues
As shortages, delays and gouges reverberate throughout the supply chain, many companies that sell physical products are stuck in a quandary. Short-term answers like cash up front or premiums can sometimes get it done, but for how long? Re-engineering can be a smart move, but it doesn't put you any further ahead in line right now. With shortages expected to last another year at least, companies need more than suppliers, they need allies.
Time for a Talk
As has been clear throughout the disruptions, a company's standing in the food chain now determines much of its ability to produce inventory. They may have had a beautiful 20 year vendor relationship that never needed changing, but these days suppliers are under deep pressures too. They not only need cash – preferably in advance -- to keep their own costly ships afloat, they need to be judicious about where to sell what they actually do make.
It's crunch time and all of your supplier's customers are screaming for goods. Some of them are crying wolf and the ones that can get away with it are stockpiling, but plenty of businesses are scary vulnerable right now. Suppliers don't want to see their customers go out of business, that's not a good long term strategy. So they try to please everyone, just enough. That may not be enough anymore.
Trust but Verify
These disruptive times are a good opportunity to review your vendors and have a very honest talk. Push the discussion so that you understand what they are able to do and not just what they're promising you for delivery. Current capacity is not a topic that suppliers like to talk about, but it's important to have the discussion.
If you need 10,000 pieces of something and your vendor can only sell you 5,000, there may be a second supplier that plugs this hole. They may even find one for you. But what happens the next time, and the time after that?
Vendor relations are only one of the challenges companies face during the ongoing supply chain disruption. Our team also takes a close look at the impact on logistics, forecasting, inventory turns, engineering and much more during our webinar "Supply Chain Pains." We invite you to hear bluesalve partners' views on how companies can overcome these challenges through winning strategies, tactics and execution.