A veteran procurement and negotiating expert suggests that ‘agile thinking’ is more pragmatically useful than many conventional supplier relationship practices for professionals in supply chain jobs.
Jonathan O’Brien urges professionals in supply chain jobs, whether permanent staff or supply chain interims, to set aside KPIs, supplier performance measurements, and quarterly business reviews in favour of a belief that a supply base contains untapped potential that can hugely enrich their business.
The conventional ‘pyramid’ of suppliers graphic (with the most important tiered toward the apex and less important toward the base) can, he believes, be paralysing.
Instead, he advocates an ‘ebb and flow’ model in which focus is redirected to other suppliers depending on changing conditions.
But what value is needed from the supply base?
O’Brien again advocates switching from an exclusive inward concentration on what the company is currently doing to viewing the supply base as an extension of the company.
Company goals can then be remodelled on the basis of hitherto unseen potential in the supply base.
The next step recommended by O’Brien follows on from this: identify the suppliers whose contribution to the business can drive up its share price (or, in the non-profit sector, its public value).
Suppliers frequently hold the key to helping companies build impressive competitive advantage and strong brand reputation, increasing shareholder value in the process.
These are the strategic suppliers that companies need in order to thrive.
A crucial consideration at this point is whether the supplier is interested in taking on this strategic status and whether they are willing to do so.
A series of procurement tools are available to make this assessment, but the answer needs to be ‘yes’ before cementing the new relationship into a more formal arrangement.
“We need a new agile intervention with the supplier where we are working together with them, sharing and knowing everything about the journey we are on, both focused on getting to the top, and each standing to gain so much that we want to get there.”