Supply chain integrity may mean many things to many people but for me it simply means having the breadth and depth needed to deal with forecast and recurring spend.
I used the word “simply” but we all know that in construction there is nothing simple about it.
It can be very challenging to set up a supply chain. Even under the most predictive circumstances it may be challenging to address all of your needs.
Over years of addressing this issue I have seen certain tactics that consistently work regardless of what your particular circumstances might be.
Today I want to share with you a few of the tactics that I have used.
Reinforce Strategic Relationships
In construction, relationships are often built up over many years of working together. Assuming the relationship is based on mutual respect, and both parties operate under fair and equitable business practices, interfering with those relationships does not benefit either party.
Anytime I see myself stepping into such a scenario I tread lightly and approach the parties with the assumption that the relationship is on level footing.
The only time I take a different stance is when one of the parties suggests otherwise.
Often, these relationships exist under informal arrangements which may have formed over several years of working together. Formalizing these arrangements is a great first step in reinforcing the relationship. This may mean rewriting an existing agreement or drafting one from scratch.
What is required will depend entirely on the maturity of the relationship.
What is important is that the valuable relationships are retained and that a formal structure is established. This is important for the integrity of the supply chain because informal relationships are at risk of dissolving as soon as personnel change.
A change in personnel could happen on either side. An informal arrangement leaves the remaining party at risk. The benefits of these long term relationships can be lost if the working relationship is not documented.
After you have reinforced key relationships, the next thing to focus on is any unaddressed priorities in your supply chain.
Regardless of how mature your supply chain may be, there are always unaddressed priorities.
The most obvious priorities may be specific gaps in your supplier pool, or recurring spot buys that could be aggregated. Those priorities are easy to identify.
More often, unaddressed priorities are procedural items that expose the organization in legal and financial ways.
The most common procedural issue I see is an inability to close out projects. This may seem like it should be a simple matter, but it is the number one recurring issue in construction.
Another priority which typically goes unaddressed is tracking Supplier performance. Even if you know that your Suppliers are hitting all of their performance goals, documenting and tracking performance is critical. Not only is it a great way to celebrate the successes of your suppliers, it also helps reinforce your buying decisions and tell management that you are on the right track.
Adding diversity in the context of supply chain integrity does not mean inclusion of minority firms in your supply pool. There certainly are other important reasons for why you should do that.
In this context when I use the word “diversity” I mean diversity in your supplier’s profiles.
This diversity could be in the supplier’s size as well as in their specialization or geographic reach. What you don’t want to do is lock in with a pool of supplier with a very narrow profile. This limits the capabilities of your supply chain.
Create a pool of suppliers that cover the broad spectrum of services you typically require. Also you should have small and large firms so you can right-size projects to your suppliers.
So those are the tactics I have found are most useful for reinforcing the integrity of your supply chain.
These tactics can be applied as high level or as deep as your supply chain goes. You can even use these concepts to deepen your supply chain.
Whatever you do, don’t lose focus on the strategic view of your supply chain. Too often we allow the urgent issue of the day rule our actions and we completely forget to step back and look for ways to enhance our status.
What steps have you taken to strengthen your supply chain? Have you used similar tactics? Tell me your stories.
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