Supplier strategy

Small business suppliers can be like a house of cards

house-of-cards

Does it ever feel like your supplier network is held together like a house of cards? Would your business survive if one or more of your key suppliers went out of business overnight? If your small business is dependent on your suppliers then you need to take the time to understand the risks of doing business with them.

Small businesses are extremely susceptible to supplier risk due to their size and financial strength.  One failed risk of your suppliers can be the difference between success and failure.  Take for example a local restaurant, partnering with a local farm to supply the organic produce.  What happens if that local farm goes out of business?  How quickly can you get them replaced and at what costs? Your whole menu many need to change as well as the pricing.  A new supplier could add tremendous costs due to transportation, less negotiation power and less capacity. The financial impact could be devastating to a small restaurant.

Supplier risk is an area that is often talked about at large companies, but difficult to implement at small businesses due to the complexity and lack of expertise.  Most small businesses don’t have all the resources available to comprehend all the issues that can interrupt your supplier deliveries. Here are three areas small businesses should be address when considering partnering with suppliers:

  1. Financial strength – just how viable is your supplier financially? Partnering with suppliers that are financial unstable is equivalent of adding another bottleneck in your company. These suppliers are unable to fill your requests timely and can cause lost sales due to their inability to fill your demands.  This can be a huge constraint to growth if you allow it.  Due diligence is key here.
  2. Quality – small businesses are often at an extreme risk due to supplier performance. Lacking key resources likely results in completely being dependent on the quality performance from their suppliers. But how often are they able to investigate these suppliers? How confident are you that your suppliers can maintain a high level of performance over time? Watch closely for the warning signs such as quality failures or late deliveries.
  3. Location, location, location – just like real estate, the closer your suppliers are to your small business the better. Transportation costs and times are shortened when partnering with local suppliers. Political issues, weather delays and fluctuations in fuel help to minimize the risk impact due to local suppliers. Shorter delivery times also allow for decreased inventory further minimizing your risk. There are very few downsides to being able to work with local suppliers.

These are just a few of the areas small businesses can use to lower risk in their suppliers.  Of course, there are many other factors that can affect small businesses such as natural disasters, economics, labor strikes, political issues, currency values, technology and social media to name a few. While it is impossible for small business owners to investigate every factor that can create risks, it is best if you invest your efforts into the areas you can control.

If you know of any small business owners that could benefit from a risk assessment of their supply chain please email info@atssoutherncal.com for more information.

Question: have you ever had any suppliers negatively affect your sales?

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How small business can challenge their indirect costs

Profit-risk

No risk no reward it is often said. Small business ownership is definitely not for the faint at heart.  Owning your own business has incredible rewards and can represent everything about yourself professionally.  The old saying of “you’ll never work a day in your life if you love what you do” certainly applies to many small business owners.

However, the same passion small business owners have for their core business does not necessarily translate well to other areas outside their core competency. Welcome to the world of indirect costs.  It does not matter if you are restaurant, medical office, manufacturer or a retail store, indirect costs can eat right through your profits in no time.  Indirect costs include many areas that are not a deliverable to your customer such as transportation, merchant services, electricity, gas, fuel, insurance and office equipment or supplies.

Small business owners struggle in these areas because of a lack of expertise, leverage and most importantly the lack of time. The indirect cost providers have no such lack of expertise or time compared to the small business owner.  This usually leaves the small business owner with the least amount of leverage.  Kind of like a nail to hammer relationship!  Not much leverage for the old nail.

However, small business owners do have options to increase their leverage if they choose.  Here are three ways they can increase their leverage with indirect costs:

  1. Open up negotiations – there a lot of indirect expenses in which there are no restrictions to competition so rebidding the service is a very viable option. This even includes using your current provider. There is nothing wrong with checking the marketplace for updated pricing and service plans. Service levels, service providers, technology and your own needs change over time. You just might be surprised to find key savings right in front of you.
  2. Buying groups – buying groups add value to their members through essentially group discounting. These groups are often associated by industry and can be a very effective way to increase leverage with providers to the industry.  There can be costs associated with joining these groups, but the cost of membership can easily payoff in the savings associated.
  3. Strategic partnerships – there are strategic partners that specialize in indirect costing solutions that give small business access to negotiation leverage they just can’t get on their own. These partners add leverage to the small business owner through their expertise and their relationships with these types of providers. They can provide preferential pricing to the small business owner because of their track record and relationship with these providers and pass these savings onto the small business owner. These partnerships not only pass along savings to their clients, but they also allow small business owners to leverage time because they act on the behalf of the small business owner allowing them to focus on their core business. Some of these partners specialize in one are while others can provide a one stop shop for all indirect costs.

Small business ownership requires maintaining cost to keep you competitive in the marketplace. While you can’t save your way to higher sales, you can price yourself out of the market.  Indirect costs are just part of doing business so make sure to review those costs for opportunities that just might give you an edge. If it has been a while since you reviewed those contracts the investment of time could payoff exponentially.

If you know of anyone that would like more information on how to reduce their indirect costing solutions in transportation, utilities, insurance, merchant services or many other areas please email info@atssoutherncal.com.

Question:  what’s the longest you have gone without reviewing a service contract with your indirect provider such as small package delivery, insurance or merchant services?

Why small businesses need strategic partnerships

Me against the world

The business world can be an intimidating place for small business. But there is no reason to think it is you against the world.  Strategic partnership can be extremely powerful and effective for small businesses to level the playing field.  Strategic partners can be used in areas such as marketing and sales, distribution or even throughout the supplier network. These alliances can be the difference between surviving or thriving.

One of the great benefits of strategic partnerships is they create the ability to leverage your resources.  Every small business has limited resources internally from capital, manpower, knowledge and or even buying power.  Strategic partners allow you to leverage areas that you may need additional strength to get a competitive edge.

Not every business relationship is suitable for a strategic partnership, so determining the proper fit is very important.  There is a process to determine who is suitable and can pay big dividends.  Kate Vitasek is a world renowned supply chain author and she calls these 3 ideas the foundation of the relationship.  Follow these ideas and you will be on your way.

  1. Trust – this can be difficult to develop and may take some time but it is critical to any relationship. It will take effort, but everything worthwhile requires work.  Trust must be developed over time through a series of actions, words and follow through.  Trust is a two way street and each party plays a vital role in matching the choices of trust along the way.  Trust is a simple concept that helps to provide a foundation for the rest of the relationship. But lack of trust destroys.  Choose wisely.
  2. Transparency – once trust is established the best way to keep it is through the use of transparency in everything. Nothing erodes trust like a lack of transparency.  Transparency helps to keep trust and can be achieved through simple agreements.  Whether it is through reporting, discussions or shared resources being transparent in your business relationship fuels the trust.  Don’t you think the current FIFA World Cup Soccer scandal could have been avoided with a little transparency?
  3. Compatibility – while trust and transparency are vital to the foundation, compatibility is like the glue that keeps it all together. Two partners that are not in proper alignment just don’t seem to fit.  It is very important to find a balance for the partnership that is beneficial for both parties and is a good fit. Proper compatibility comes from the proper alignment of values, culture or size.  For example, would it make sense for a small local organic restaurant to partner with Monsanto?  Not a chance!

Strategic partnerships have proven to change the course of history from Ford and Firestone, to Steve Jobs and Steve Wozniak or even Ben and Jerry. Partnerships can have a dramatic effect on your business from sales development to cost reduction in your supplier base. If you are ready to dominate vs. participate let strategic partnerships help you get there.

If you know anyone that would like help understanding how to develop strategic partnerships for their business, please email info@atssoutherncal.com for more information.

Question: what are some of your favorite business partnerships?

Remembering our military supply chain

Arlington cemetary

Memorial Day in the US is a time for us Americans to remember those who gave and risked their lives for our freedoms.  In observance of Memorial Day, there will be no article, but instead a salute to the men and women gave the ultimate sacrifice.

Since this is a supply chain blog, I thought it was best to remember those in the military supply chain.  Logisticians do their best work behind the scenes and away from the battlefield but they play a vital role to the success on the battlefield.  Today my salute to them is remembering their work by posting my 5 favorite military logistics quotes:

“Gentlemen, the officer who doesn’t know his communications and supply as well as his tactics is totally useless.”
– Gen. George S. Patton, USA

“You will not find it difficult to prove that battles, campaigns, and even wars have been won or lost primarily because of logistics.” – General Dwight D. Eisenhower

“Forget logistics, you lose.”
– Lt. Gen. Fredrick Franks, USA, 7th Corps Commander, Desert Storm

“Logistics … as vital to military success as daily food is to daily work.”
– Capt. Alfred Thayer Mahan, Armaments and Arbitration, 1912

“Amateurs talk about tactics, but professionals study logistics.”
– Gen. Robert H. Barrow, USMC (Commandant of the Marine Corps) noted in 1980

Tank in C17

On behalf of a grateful nation, thank you for your service.

5 Benefits of Procurement Outsourcing

square-peg-round-hole

Have you ever felt stuck to move forward on a project because the skills required was not a good fit for your resources?  Kind of like the square peg in round hole scenario.  Yet you knew that making it happen would be in the best interest of your organization?  Think about it for a second. How would you handle this at home if you had an electrical issue and you were not an electrician?  The possibility for electrocution is severe enough to call in experts for most people.

Negotiating goods and services outside of your area of expertise can be just as paralyzing.  Many organizations end up spending too much money due to outdated contracts because they are afraid of losing at the negotiation table or they just simply don’t have the resources to engage.  Markets, technology and your needs change constantly. But existing contracts seem to remain the same.  If companies really understood how much money they could save it would be impossible for them to ignore.

But how do you access the savings with limited internal resources. Fortunately, there’s procurement outsourcing.  Here are 5 key benefits of procurement outsourcing that can help any size organization:

  1. Expert talent

Major league baseball allows for the designated hitter (DH) who bats for the worst batter in the lineup. The result provided dramatic increases in home runs, RBI’s and created hall of fame credentials for some players.  Procurement outsourcing allows you similar opportunities to shine.  How many companies have the talent in house that can negotiate freight, utilities, financial services or maintenance contracts? Not many.  But like a DH, procurement outsourcing is there to give you access to the best expertise at your weakest position.

  1. Reduce risk

Procurement outsourcing can reduce your risk because it is only used on demand.  There is no need to keep full time staff. Use it as you need it.  By the project, short periods or if you just need expert help in negotiating a specific category in which you have little to no experience.  For example, transportation companies have full time staffs that do nothing but specialize in negotiation of transportation.  These negotiations come down frequently to highly experienced specialist on one side of the table vs little to no experience on the other side.  Who do you think wins that game?

  1. Reduction in overhead

The focus of procurement outsourcing is to provide added value through better contracts. But one additional benefit is that it reduces overhead costing too.  No need for training, insurance, office space, medical benefits and all the other employee related expenses.

  1. Increased opportunities for procurement solutions

Using in house procurement limits your solutions to only the skillsets and opportunities within your organization.  Procurement outsourcing has the advantage of having a greater vision to procurement solutions that go well beyond your organization.  Through strategic partnerships, ability to pool expert talent and the overall experience allows for the perfect environment for creative solutions that are not accessible through in house procurement.

  1. Core focus

Using procurement outsourcing allows your organization to focus on your core competency. It doesn’t matter if you are a restaurant, manufacturer or a law office.  Keeping your limited resources focused on your core business is crucial to your success.  Asking your procurement team to negotiate contracts outside of their expertise is just not a good fit.  Let them do their job and let experts handle the rest for you.

Just about every organization uses outsourcing services of some kind whether it is legal, payroll, IT or human resources.  Procurement outsourcing is just the next service frontier.  Competition is forcing companies to get leaner and more effective.  How can you ask more from your team that is already stretched thin?  Procurement outsourcing just might be your answer.

If you know of anyone that would like more information on how procurement outsourcing can be a fit for their organization please email info@atssoutherncal.com

Question:  Have you ever felt over matched at the negotiation table?

The next level in the supply chain

Man in tunnel_light

It is time for supply chain professionals to shed some light on how things are made. Global economics can be a double edge sword.  It has the power to increase sales exponentially, but on the other side it has the power of to corrupt and abuse just as easily.  Business today demands companies continually look to make goods and services more cost effective or lose market share. It’s that simple in many cases.  We consumers love getting a great deal, but what’s the real cost in terms of the supply chain practices.  The fact is we know very little about those practices.

Companies that purchase goods and services have a responsibility to understand what practices are really going into their products they sell.  Due diligence in the supply chain can be daunting but worth the effort.  Languages, cultural differences, laws, business environments and many other factors play important roles in how business is awarded.  Labor practices, environmental impacts, working conditions and business practices are real concerns when awarding business to foreign companies.  Companies that profit from these arrangements have a responsibility to be aware of what they are buying.  Why is it that we consumers know more about free range cattle than free people in the supply chain?

The good news is that this awareness is beginning to ramp up.  Recent tragedies and social media are driving awareness that global supply chains won’t be able to ignore.  Unfortunately, for every abuse that has comes to light there are many more we never hear about.  The good news is there are several companies that have begun to leading the way such as Apple and Coke that have really made due diligence apart of their corporate responsibility.

Here are 5 ways to help your organization use your supply chains responsibly:

  1. It starts at the top

Executive teams must make a commitment to support fair and responsible trade throughout the entire supply chain. First level suppliers are not enough. They need to collaborate with their suppliers to go beyond just the first level and ensure all the way down to raw ingredients are made responsibly. Comprehensive policies addressing fair and responsible supplier practices need to be incorporated just like any other quality system.

  1. Transparency in the supply chain

The bottom line is that transparency creates trust.  Collaboration in the supply chain is dependent on trust.  Ensuring quality products has long been the focus for sourcing professionals but now it is time to take the supply chain to the next level and create transparent supply chains practices.

  1. Data systems

Today information is more accessible and relevant than ever before.  Organizations such Made in a Free World help put information into the hands of decision makers that award contracts to foreign suppliers.  This data is powerful and positively impacts lives across the planet.

  1. Third party inspection companies

These companies can provide on-site inspection services and can provide insight into what is taking place onsite.  They are an important part of the process as they can be your eyes when you cannot be at the supplier. It is very important to maintain they are independent from the supplier to provide objective information as to the performance of the supplier. They are beginning to provide oversight into working conditions and environmental issues.

  1. Responsible supply chain practice labels

Organic food supply has created a tremendous amount of awareness when it comes to what practices go into the food supply.  Why don’t we have that for people and the environment?  I think it is time we create labels on our packaging that let’s everyone know these products are made from a responsible supply chain practices.

Supply chains reach and impact people, countries and the environment across the world like few other disciplines.  It is our responsibility to use that influence correctly and reward those suppliers willing to offer transparency all throughout the supply chain.  We see it working with the organic food chain so it is about time we step up and make it work with people and the environment. People are worth the effort!

If you or anyone you know would like to learn more about responsible supply chain practices please email info@atssoutherncal.com for more information.

Question: Do you think adding “responsible supply chain” labels would make an impact to the end user?

Is your procurement team ready for center stage?

center-stage

Centralizing procurement is a timeless argument that has plenty of support on both sides.  Cost savings can be identified quickly, but why should the end user be the one that suffers because some other area is saving money? How does their input figure into the argument?

The great part of centralized procurement is that you control all the pieces. Centralization puts you in the driver seat for better negotiations, increased visibility of demand flows and at the same time increasing your overall level of talent.  The key is to balance the benefits of centralization while not losing the local touch.  Thanks to technology, keeping a localized touch is now easier than ever before.

Cash flow is king and centralizing procurement directly impacts your bottom line like few other business strategies. Here are 5 key benefits that will impact your organization by implementing centralized procurement:

  1. Negotiation leverage

The biggest benefit in centralizing procurement is the benefit of being able to negotiate with your centralized demand.  Would Walmart ever consider negotiations with their suppliers based on an individual store?  Never and neither should you.  Negotiating with your suppliers with centralized demand in mind increases your leverage significantly.  Consider it buying in bulk.  Negotiations change quickly when you can look at a bigger picture.

  1. Increased utilization of resources

Everyone has to deal with limited resources and centralization allows for the most effective use of those resources.  This not just limited to manpower, but other resources such as space, equipment and technology.  Why pay additional expenses for duplicate resources if you have the option to consolidate expenses.  Office space, software licenses, training and many other opportunities exist in the consolidation of procurement. Fluctuations in the marketplace create challenges when attempting to allocate resources and centralization helps to smooth out those peaks and valleys.  Centralized procurement is better equipped to handle seasonal demands, new projects or customer spikes than a localized procurement strategy.

  1. Strategic alignment

Implementing strategic goals across an organization is tough enough, but attempting to implement strategies in procurement when there are different leadership teams is even tougher.  Aligning the teams into one centralized structure allows for a consistent message to be delivered top to bottom. It also lends itself to standardized processes from beginning to end. Key metrics are easily identified, tracked and used for evaluation throughout the process.

  1. Driving down costs through technology

ERP solutions have changed the game when it comes to centralizing procurement.  Centralized procurement is now possible through the use of ERP applications that can be accessed from just about anywhere.  Cloud services make those solutions easier today that what it was just a few years ago.  Now purchasing can essentially stay on top of all localized demands through real time ERP systems.  Inventory levels and logistics costs can be directly reduced through information that is easily accessible in centralized ERP applications.

  1. Procurement outsourcing

Outsourcing is a well-established model that is widely utilized in many areas such as IT, Human Resources or Payroll and is now gaining traction through procurement outsourcing.   Centralized procurement allows for a much easier transition since many of the processes can be standardized and information is flowing through one focal point rather than many points. Procurement outsourcing is an extension of centralization because it allows even greater access to industry experts and potential technology solutions such as eprocurement applications.

Centralized procurement is a strategic solution that helps benefit operational efficiencies across many areas from negotiations to increasing cash flow.  Once upon a time, keeping the localized touch was out of reach with a centralized procurement strategy, but today’s technology such as ERP applications easily helps keep centralized services in touch with end users as if they were just next door.

If you or anyone you know would like to know more about how centralizing procurement can add value to your organization please email info@atssoutherncal.com

Question: Have you ever been hurt or helped by centralizing a procurement function?

Global sourcing is risky business…

Faceless man

Global sourcing is risky business. These risks come in many forms such as quality failures, environmental exploitation, supply chain delays, stolen intellectual properties, financial fraud or just plain theft. Add in language barriers and cultural issues and the process can be very complex and risky. But where there is risk, there is also reward.

The big question then is the risk worth the reward?  It certainly can be as long as you take some actions to minimize the risk.  One of the best steps you can take it is finding a global sourcing partner to help you navigate the process from beginning to end. They can be your partner behind the scenes.  Here are some great benefits why a global sourcing partner can help you reduce your risks in sourcing products overseas.

  1. Sourcing partners can help break down cultural barriers when attempting to do business overseas. They are fluent in the local language, business practices and can help represent your needs to the potential suppliers in a very professional manner.
  2. Supplier qualification is a very key step and using a global sourcing expert plays a vital role in this process. This is where the expert can pay for themselves. They help validate the supplier through certifications, production capabilities, site location, customer referrals, site visits and much more. Qualifying a supplier up front will save a ton of headaches after the fact.
  3. The type of payment method is another key area that a sourcing partner can help counsel based on the type of transaction. Wire transfer, Paypal, Letters of Credit, open accounts or cash-in-advance are all options and each option has its own set of pros and cons depending on which side of the transaction you are on.  Both sides need to be come to an agreement that facilitates doing business together and a global sourcing expert is a great resource for this.
  4. Maintaining production quality throughout is one of the riskiest parts of the entire process. Setting up the right quality parameters up front is the key to success. Defining the specifications, getting approved samples and establishing ongoing quality checks in the process help to ensure a successful outcome.  I have seen first-hand the costly mistakes of poor quality and the negative effect it can have from lost sales, a bad customer experience and tying up huge amounts of inventory dollars waiting for a resolution. This is truly a case where a dollar of prevention is worth many times the cost of the cure.

Sourcing products from overseas can seem risky but with the right partners it can add a tremendous amount of value to any company.  Global sourcing has been a way of life in business since early explorers developed trade routes around the globe hundreds, if not thousands of years ago. There is no reason to believe this practice will stop anytime soon. It is your choice whether to take advantage of the opportunity or not.

If you or anyone would like learn more about how global sourcing experts can reduce the risk in overseas sourcing, please email info@atssoutherncal.com for more information.  We would be glad to assist you in finding the right partner for your business.

Question: what were some of the cultural challenges you had to overcome when doing business overseas? 

Collaboration creates synergy in the supply chain

UM huddle

Supplier collaboration is like synergy-the whole is greater than the sum of its parts

In sports, working together for a common goal to win a championship is a given. Those teams that do it the best separate themselves from the competition creating lasting legacies that live forever. The winning spirit (a collaborative process) begins when the coaching staff lays the foundation for the season long before the season even begins.

Developing collaboration in the supplier base has a lot of similarities to winning championships.  Collaboration and winning teams share common characteristics such as a team vision, a foundation built on trust, structure and accountability to each other. All of these elements that create winning teams also help drive a shared collaborative team environment.  Creating collaboration in the supply chain, much like winning championships, will separate you from the competition by providing opportunities not afforded to those that work alone. Expanded market penetration, product innovation, cost reductions and shorter lead times are all possible when using a collaborative approach to engaging the marketplace.

So how do you translate winning on the field to collaborative winning in your supply chain?  Follow these four elements and you will be on your way:

1. Invite the supplier to participate.

Sounds simple, but if there has been a long standing relationship or the players have changed over time, it is time to reset. This is especially true if there has been friction in the past.  Besides who doesn’t like a warm invite?  It does not matter if it is about business, dinner or just a drink with friends.  No one wants to feel like they are crashing the party. A warm invite is usually well received and if done in the proper context can help to set the table for a collaborative relationship

2. Establish a foundation

Kate Vitasek (Founder of Vested Outsourcing and world renowned supply chain author) says it best, “trust, transparency and compatibility” help to define the basic foundation of any business relationship.  Once these three key elements are established, the creativity is allowed to flourish instead of being stifled.  It is in this freedom where ideas are developed to create unique solutions throughout the supply chain. The entire supply chain becomes open to discussion so opportunities may be found in planning models, product innovation, pricing, packaging, logistics, capacity, distribution or simply better information.  No one wants to feel boxed into a corner and the right foundation allows people the freedom to engage in new ideas.

3. Develop a structure

Just like a building, once the foundation is set, the structure building can begin.  A common vision helps to frame the structure, but a forum of communication needs to be developed that helps support an environment of ideas and provide feedback throughout the process for what is working and not working.  These communication tools are also key elements in establishing a method for accountability to keep all parties on track.

4. Create incentives

Setting the foundation, creating strong communications and accountability are great, but without the proper incentive, sustainability is difficult. Only through fair incentive policies will all parties feel justly compensated for their involvement. Incentives are not always restricted to just direct compensation.  Incentives such as exclusive rights, product innovations, inventory solutions, additional capacity or shorter lead times may be creative methods that can provide a winning edge over the competition.  What is it worth going to market knowing you can be first with product innovations or shorter lead times?

Champions in sports stand out above the rest of the crowd.  Winning in business involves creating a profitable and sustainable game plan. Collaboration in your supply chain can be a vital key to creating that game plan.  Isn’t it time to make your entire supply chain greater than just the sum of its parts?

Question: what are some of the most unique collaborative projects you have worked on?

Why companies are leaving money on the table in their supply chain

Money-on-the-Table

Would you ever leave money on the table if you were aware of it?  Of course not!  However, if you do not think of your supplier base as an asset in your business you are leaving money on the table in your supply chain.  Businesses have a tremendous amount of money invested in their supply chains from direct costs such as inventory to indirect costs such as maintenance.  Unfortunately most organizations fail to think this way.  The direct effect is that they are leaving money on the table and in most cases they don’t even realize it.

Below are a few areas examples where companies leaving money on the table:

  • Considering only your in-house talent
    • If you only consider the expertise within your own 4 walls as part of your business competence, think again.  Every company has their core business they are good at, but what about tapping into the skills of your supplier base? I have seen many times a company dictate irrelevant requirements that add costs and lead time with no added value.  This is the equivalent of asking your supplier to count every grain of salt in a recipe when you just need a couple of shakes. In cases like this, the supplier may often be incentivized to follow strict requirements that are not needed and because their only stake in the relationship is to make money, guess what they choose to do? Globalization is forcing all companies to find cost effective solutions that go beyond their in house talent.  The time is now to give suppliers incentives to change the process and use the skills they bring to the table.  You do not need to know every skillset, instead use your supplier base to expand your capabilities.  They are not the enemy and should be considered an asset and given incentivizes to provide solutions that add value.
  • Marketing opportunities
    • Partnering with the right supplier not only helps you find cost effective supply solutions, but can give distinct growth opportunities.  For example, restaurants and grocery retailers may have opportunities to build campaigns around local fresh ingredients that supply their businesses.  This can also be used to help reduce carbon footprints, reduce emissions in the supply chain and help promote local partners. “Made in the USA” is a slogan frequently used with US manufacturers to help identify companies sourcing components within the US.  Even the opportunity to provide the exclusive distribution offerings can be incorporated with the right partner.  What was the iPhone worth to AT &T when it was first introduced?
  • Collaboration to drive innovation and cost reduction
    • What is it worth to be first into the marketplace, have favorable payment terms or have your suppliers invest in product development costs?  Giving the right incentives and an environment that fosters innovation, suppliers will often find ways to offer unique advantages not afforded to the others in the industry such as cost reduction projects.  These incentives give suppliers the trust needed to take risks to provide solutions such as vendor managed inventories, favorable payment terms, product innovation and much more.  These solutions can provide opportunities to be first in the market, increase innovation and drive down cost.  Costco for example uses their suppliers to develop packaging solutions that increases volumes but at the same time lower cost per unit.  That’s not by accident.

Don’t limit potential advantages to just your within your own team, it will cost you in the end through higher costs and less distinction.  Creating a supply chain advantages is a must for those companies looking to differentiate from the competition.  If you or any organization you know are looking to develop supply chain strategies that create marketplace advantages contact me for a no-cost assessment.

Question: what unique supply chain solutions have you experienced that gave your business a distinct advantage in the marketplace?