Supply Chain Managers are increasingly playing a central role in the success or failure of companies. Cross-functional, strategic level skills are now required. Supply chain is a source of competitive advantage, or conversely competitive disadvantage if not managed properly. When Supply Chain Managers do not have a strategic mindset, cost savings incentives will have a perverse effect. An unproductive adversarial attitude towards suppliers becomes ingrained into the culture.
Following are 7 key habits of successful Supply Chain Managers, necessary to succeed in this new world order:
1) They negotiate Win-Win solutions
Too often Supply Chain Departments interpret the Golden Rule to mean: “whoever has the gold, rules”. The best negotiators are masters at uncovering the underlying needs of both organizations and finding solutions that are mutually beneficial. Win-Win negotiations build trust and commitment. Relationship savings account full of goodwill is an invaluable asset when problems occur.
2) They regularly attend product development meetings
Great supply chain managers seamlessly integrate with engineering teams. They understand that 70% or more of costs (and often avoidable quality issues) are typically designed in, and therefore early supplier DFMA partnering is crucial. Tackling costs after a product has been designed, leaves suppliers’ profit margins as the main “cost reduction” target. Focusing on dictating the level of supplier profitability limits the potential cost savings, reduces design for quality benefits, and breeds resentment.
3) They personally call key suppliers at least once a quarter
Only calling when there is a problem is a sure way to be forwarded to voice mail. Informal calls to “check-in” are a powerful way to build relationships, keep lines of communication open, and discover hidden issues impeding progress. Try starting the “check-in” call with a non-business chat. Universal bridge building topics such as hobbies and family will actually elevate the level of business information shared.
4) They treat suppliers as partners in the value chain
Approaching all communications as if addressing a business partner changes the tenor of the conversation. This is a powerful method to gain buy-in, and for resolving gating factors that are decelerating your product to market strategy. Competitive advantage from vertical integration has been supplanted by specialization along the value chain. Businesses are therefore more interdependent than ever before.
5) They promote the supply chain as a source of innovation
Traditional supply chain departments focus on cost-cutting, leaving innovation to the engineering teams. The best managers are familiar with their suppliers’ technology development roadmaps. They work closely with the engineering teams of both companies to tap that well of innovation.
6) They practice Rightshoring
Source selection should not be driven by a preset geographic bias. The lowest bidder is not always the lowest cost supplier. A Low-Cost Country, when measured against a Total Cost of Ownership standard, may not live up to its reputation. Rightshoring requires an understanding of the high-level strategic business plan and selecting manufacturing partners most capable of helping to achieve that plan.
7) They continually develop their cross-functional skills
Successful supply chain management demands a breadth of knowledge spanning all departments. Supply Chain Managers are an integrative hub in the wheel, with spokes leading to R&D, manufacturing, quality, accounting, marketing, sales, and IT. Add to that list the need for functional knowledge of cross-cultural negotiations, economics, lean, logistics, organizational behavior, and international business.
The next time you are interviewing a candidate for a Supply Chain Management position ask what the best method is for lowering cost. If the answers are “internet-auctions”, “get tough”, “bid the parts out”, “dual sourcing”, “source consolidation”, “should cost exercises” or “low cost country” keep looking.