PROCUREMENT; supply chain blending is a must-have skill
If you are in Marketing Procurement and are looking for a mantra to guide you throughout 2018 then there is no better one to consider than “One size does not fit ALL”. It is wrong to assume that one supplier can provide a best-in-class solution across all the requirements of a supply chain. This is especially true when considering the complexity of spend areas like retail investment programs. These types of programs require highly skilled disciplines such as market research, shopper marketing, conceptual design, technical engineering, production management, logistics optimization, merchandising etc. These all need to work seamlessly together to deliver the best possible outcome.
“If you expect a supplier to do everything, you will only be able to receive an average at best solution, where there is no discernible competitive advantage.”
There is a growing trend in the marketplace for companies to outsource the management of complex supply chains to just one company. In this way, they are able to reduce internal complexity as they now only need to hold one supplier accountable for delivery. The challenge however, with this approach, is that in all likelihood that one company will not have the skill base or resources to provide a high level of performance for every step of the supply chain. If only one area of the supply chain does not function well then it can significantly impact the final outcome and the level of value that is delivered overall. To abdicate the responsibility for overseeing the supply chain to an outside company is risky at best and, in most cases, will significantly erode the value that should be delivered.
The reason that there is still a growing trend to move to a single source supplier is due in part to one small but very important fact; the responsibility for data capture, insights and performance reporting is also outsourced. As an example, I continually come across instances where cost saving reports are generated by the suppliers themselves, with no validation undertaken through any other means.
“Abdicate the responsibility for data capture and performance reporting to your supplier and you will become the least knowledgeable party in the relationship.”
So, what other approaches can be considered? The other traditional method of sourcing marketing requirements is to adopt the “preferred supplier” strategy where several competing suppliers are identified and included in all future tenders. This does have the advantage of ensuring a highly competitive focus on a specific area. However, the problem with this approach is that the entire supply chain is generally not considered. Tenders are usually disconnected from supply chain outcomes and this breaks the chain and negatively impacts overall performance.
The real opportunity lies in BLENDING; working with the best possible suppliers but in a way that they are seamlessly integrated across the entire supply chain and all working to generate the same outcomes.
Key principles are:
- Supply Chain over Purchasing
- You in Control over Supplier in Control
- Specialists over Generalists
- Connected over Isolated
- Flexible Supply over Single Supply
- Waste Reduction over Margin Reduction
Here are six very simple key principles to bear in mind when seeking to implement a blended approach:
The only result that matters is the one that positively influences the end customer. Own the supply chain and focus on the final outcomes. Ensure there is clarity and focus on your goals. Embed continuous learning.
Put yourself in control. Make sure you have the data you need. Become better informed than your suppliers. Ensure your data sources are stable, reliable and owned by you. Act on the insights generated. Validate all your decisions.
“What gets measured gets improved.” ~ Peter Drucker, considered the father of Modern Management
3.Find the best
Don’t settle for average. Find the best providers. Seek competitive advantage by developing the best outcomes. Do not accept mediocrity. Identify tangible points of differentiation as this is what will give you the edge in the market.
4.Connect the dots
Ensure clarity on roles and accountability. Focus on handovers. Identify possible break points and ensure there are agreed remedial actions. Link the data, so dependencies are clear. Always use data visualization to help identify areas of improvement.
“Without data, you’re just another person with an opinion.” ~ W. Edwards Deming
5.Embed flexibile sourcing
One size does not fit all. Ensure the supply chain is flexible and can embrace new sources of supply. Blend local production with centralized supply to always deliver the best solution. Achieve this by controlling the data, specifications, standards and processes.
6.Focus on waste reduction
Remove waste and you create value. Discard anything that does not directly influence the final customer. Treat people’s time as an investment and find ways of improving the Return on this Investment. Always demand transparency.
“Blending is a business technique that seamlessly connects high quality services into a fully integrated supply chain to deliver the maximum influence on the end customer.”
Here’s to a very successful 2018.
If you would like more information on how LeanPie can transform your shopper experience supply chain, please feel free to contact David at email@example.com