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Supplier Management; A change of perspective

Supplier Management is a tricky business; you often have a complex array of commodities or services being provided by an selection of different companies.

And just to make life just that little bit more difficult, it’s rare that each supplier acts in isolation. More often than not a part of what one supplier delivers (or not!) will directly impact a part of what another supplier delivers and the knock-on goes down the chain.

In a service delivery environment these impacts or difficulties can be exaggerated because any process in place won’t follow a nice linear manufacturer line but has the variable of a customer and choice to accommodate.

What works well – managing by commodity

What we have seen in a diverse service related supply chain is that Subject Matter Experts (SMEs) control the suppliers and therefore the commodity in isolation. There is a lot of sense behind this as the SME understands;

  • The market place
  • The commodity
  • What good looks like

The end result is often that each supplier or commodity is generally well managed and the three key pillars of measurement (cost, time and quality) are where they need to be or within an acceptable tolerance. The “horizontal” management which is most common place certainly has merit.

What about the vertical?
What about the vertical?

What does not work quite so well – the wider view

However, the business in which the supply chain fits is rarely run on commodity lines; there is a wider strategy, vision and set of goals which the supply chain will contribute towards.

Let’s take a theoretical example. The board of your company has received consistent feedback that whilst their offering is considered to be at a good price point, customer complaints are escalating and the service rating has never been lower. Strategic change has been required therefore to improve quality across all areas and it is accepted that this might have a small cost increase. Because the business has been slow to effect change in the past, there is now a big pressure push from the top to see action.

As Head of Supplier Management you gather your team to explain the revised focus.

  • You review the complete supply chain metrics looking specifically at the service performance
  • Each supplier has been consistently outside target, but only by a relatively small margin
  • In isolation and viewed in a silo of single supplier activity this service drift was noted but not deemed worthy of a bigger set of actions
  • As a combination though, the service failure looms a lot larger

Next actions look something like this

  • Each SME is now tasked on service over cost
  • Each will pull a set of meetings to relay this to each supplier they deal with
  • Each will tell you why something can be done but maybe not as you outlined because of “unique conditions to my commodity”
  • Some will increase prices and ask for a service improvement with very marginal improvements

And so on, and so on.

How to include a wider and future focussed perspective

So in addition to managing by commodity it is as important to view the complete supply chain output through the same measures and lens as that of the wider business.

Also it’s worth thinking more about HOW the supply chain is measured.

Performance targets and Management Information (MI) are vital barometers of how the supply chain is or was fairing; with as long as a month’s delay in receiving MI it is often a snapshot of the past. By reviewing the supply chain output as a future focussed risk assessment proactive measures or at least plans of actions can be formed at a far earlier stage.

Any templates that could do this for me?

Are there any templates that can do this for me?

This Supplier Dashboard and Log does a great job – it is tried and tested!

Supplier Risk and Performance Dashboard Template (POCCET)
Supplier Risk and Performance Dashboard Template (POCCET)
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How to look good at work (from a business rather than image perspective!)

We have been on some management courses over the last few months and having let the dust settle (thus avoiding the immediate post course evangelicalism which irks even the most tolerant mind) we have come to the conclusion that we have actually learnt a great deal and that it is relevant. And useful. And in some cases actually surprising!

1. Niche is good, no matter what your niche is. So long as there is a market.

Progressive Corp is an insurance company which focusses on all the types of people the other firms avoid like the plague.

So, know your market. REALLY know your market and show that you know it through market analysis tools. Such as Porters Five Forces or PEST.

2.  Synergies are not always actually a good idea. Most companies have traditionally thought they are, but the world has changed.

It is more demanding and quite simply it is a tough market out there; focus on what you are good at, world class at, and do it.

This means that backwards or reverse integration is not the answer. Outsourcing is. Unless you are world class at it. (You get the gist). Japanese car manufacturers realised very early on that they were not as good as the electronic companies at making stereos, so they did not try and complete, they just struck up a deal. Get good at finding who in the market can deliver what you need for you, via procurement channels. Or have a look here.

3. IGNORE your customer.  Yep, you read that right. Ignore them. Not on everything, of course, answer the phone, respond to e-mail and help them.

But think what would have happened if Steve Jobs had asked the mobile phone using public what they wanted from a phone and then given it to them? It would not have been anywhere near the i-phone by a long, long way. He didn’t ask, he gave them something they hadn’t even dreamed of yet.

4. Customise your output in what ever you do. Make it fit the needs of what you are doing not the other way around.

These are the highlights, there was a lot more!

If anything has struck you, contact us. If point 4 has struck a chord and you want to talk about how our content could be modified to fit your needs, PLEASE contact us. We shan’t follow our own advice concerning point 3!

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SWOT Analyse – Simple Idiots Guide: Templates, Examples & Help

The SWOT Action Plan Process

We can help you SWOT Analyse your project or your idea. Here are some simple templates and guides to help you with SWOT, with examples.

SWOT Matrix template: Strengths, Weaknesses, Opportunities, Threats
The SWOT Analyse Template Pack

SWOT is part of Management Jargon, but is pretty useful for fast assessment of lots of ideas.

What EXACTLY Does SWOT Analyse Mean?

S.W.O.T. stands for:

  1. Strengths – What things are GOOD?
  2. Weaknesses – …and what things are BAD?
  3. Opportunities – Does it open up areas which are GOOD?
  4. Threats – Are there things that MESS IT UP?

SWOT Cheat Sheet

Here are some prompts for your SWOT, so that you can make it complete:

Strengths

  • Patents?
  • Strong brand name?
  • Good reputation among customers?
  • Many product lines?
  • Broad market coverage?
  • Manufacturing competence?
  • Good marketing skills?
  • Good materials management systems?
  • R&D skills and leadership?
  • Information system competencies
  • .. more available from our SWOT analysis template discount bundle

Weaknesses

  • Obsolete, narrow product lines?
  • Rising manufacturing costs?
  • Decline in R&D innovations?
  • Poor marketing skills?
  • Old content management systems?
  • Poor reputation?
  • High cost structure?
  • Loss of customer good will?
  • Bad information systems?
  • Inadequate human resources?
  • Lack of access to distribution channels?
  • .. more available from our SWOT analysis template discount bundle

Opportunities

  • Expand core business(es)?
  • Exploit new market segments?
  • Arrival of new technologies?
  • Removal of international trade barriers?
  • Exploit unfulfilled customer need?
  • Widen new market segments?
  • Extend cost or differentiation advantage?
  • Diversify into new growth businesses?
  • … more available from our SWOT analysis template discount bundle

Threats

  • Attacks on your core business(es)?
  • Increases in domestic competition?
  • Shift in consumer tastes?
  • Emergence of substitute products?
  • New regulations?
  • Increased trade barriers?
  • Increases in foreign competition?
  • Change in consumer taste?
  • Fall in barriers to entry?
  • Rise in new or substitute products?
  • … more available in our SWOT analysis template discount bundle

Get a bundle of templates to help

SWOT Template Discount Bundle
SWOT Analyse Template Discount Bundle