How Secure are Your Sources of Supply?
How secure are your sources of supply? To what level would your business be impacted if any one of your suppliers were compromised? What steps are you taking to secure your supply sources?
There has been a lot of controversy recently surrounding numerous airlines’ growth plans being severely impacted by their key supplier; Boeing. This ongoing supply crisis serves as a sobering reminder to all businesses, how important it is to get super clear on their key sources of supply and ensuring that their continuity of supply is as secure as possible.
For those in the business of manufacturing these sources of supply are even more evident, with raw materials, equipment etc, being the obvious supply sources. When it comes to services business, talent is a key source of their supply. Without quality talent, delivering the type of service you offer at the desired standard is extremely difficult, and if you’re trying to scale your business, the degree of difficulty increases significantly.
In addition to talent, all businesses now more than ever are reliant on technology from IT, hardware, software, cloud solutions, and other technologies that have become critical to our daily business operations. In fact, some of these sources of supply are so enmeshed in our businesses, they have been very successful in creating lock-in and what we call “stickiness”. If some of these services were to cease or be temporarily cut, the outcomes may well stop your business and the results could be catastrophic.
Whilst our advisory team has been observing our clients making major headway into client/customer relations, one thing we are noticing is supplier relationships and the security of supply chains can often be underplayed, not always getting the relevant attention they deserve.
When our growth advisors work with leadership teams, we encourage them at a base level to really assess the security of supply across their supply base. We run them through our ‘Market Map’ activity, where we help them identify their customers, competitors, trades associations, and major suppliers. This is an activity all businesses could and should be undertaking on a regular basis.
Once you’ve done this, we recommend you assess the strength of relationships your business has with each supplier. The more critical the supplier to your business, the more important it becomes for you (the CEO/Owner) to establish and nurture high level relations with their senior people, in addition to maintaining high functioning relationships at operational levels.
Here are our top tips on things you can do on routinely to better secure your source of supply.
Identify
Identify all major areas of your supply chain
What is the category?
What is your annual spend?
What is the relative importance to your business?
Assess
Assess the risk of each supply source.
How would your business be impacted if that source began to ease or was temporarily halted?
What are the risks to your business if this happened?
Evaluate
Evaluate the nature of your business relationship with each of your suppliers.
Is it as sophisticated and robust as it needs to be?
Is there more you could do to strengthen those ties?
What are your alternate options if one of your suppliers can’t deliver?
Action
Determine your business’ key actions.
What needs to be done?
By whom?
By when?
Then feed all of the information into your meeting rhythms.
Regardless of whether you are a goods or services business, maintaining a keen focus on your supply partners and the relationships that support them is crucial for any business’ longevity, ongoing growth, and success.
For more tips and insights on how you can help your business thrive, read our other blogs.