1. Companies are no longer discrete entities. Today’s organisation is just one link in an extended value chain. The strength of our organisations is reliant on the strength of every link in the chain. If one fails, we all fail. If one is corrupt, we are all corrupt.
So much of what our organisations are now held accountable for no longer takes place within the four walls of our offices.
Apple is a great example of this. The computer giant has long been considered to have the ‘best supply chain in the world’. But many have argued, and I tend to agree, that Apple is a ‘marketing organisation’. Their strength lies in their ability to create hype and desire around their products. Their supply chain is so successful because they collaborate with their suppliers, allocating them a level of responsibility and opportunity few other organisations do. Apple relies on business partners both up and down its value chain to make its products great.
2. Consumer expectations have changed. We read everyday about traditional businesses being swallowed up by disruptive new market entrants. These challengers tend to have access to new technology or a new way of doing business and this changes the playing field for the incumbent. In recent years, the challenger has been winning and winning fast. This is largely due to the fact that the incumbent never saw the challengers coming. By creating stronger links with your supply base you create a greater connection to the broader market and the threats that might lie within. Understanding your market allows you to move proactively and stay ahead of challenges to your business.
3. Making the move from incremental improvements to transformational change. I hate LinkedIn memes, but I saw one the other day that I think is particularly pertinent to the procurement community. It was attributed to the Right Honorable James B. Bolger, Chairman of the Advisory Board of the World Agricultural Forum, but I’m sure he wasn’t the first to say it. It goes like this:
“Yesterday’s thinking will not solve tomorrow’s problems”
This statement resonates within the procurement context because I believe the business processes we currently use are grossly antiquated. The processes and management techniques we employ to engage with our suppliers are remnants from the industrial era. We’re using methodologies and practices that were designed to maximise the output of a cottage industry steel mill from a bygone era to run our modern businesses.While these methods have driven incremental improvements, in the face of disruptive technology, the internet of things and the more connected collaborative economy we find ourselves in, they simply no longer stand up.
We’ve discussed the need to leverage and realise 10X improvements (improving performance by a factor of 10) rather than 10% improvement on the Vizibl blog before and closer supplier collaboration is a certain prerequisite for this to take place.
The same old supplier relationships will deliver the same old results and with today’s rapid change of pace, that simple won’t be enough. It’s time to be bold, it time to change. And lets be clear Supplier Cooperation is Not Supplier Collaboration!