Long ago the strength of your supply chain was merely determined by the level of contingency suppliers you had at your disposal, in addition to the degree of cost management achieved for the organisation.
To achieve a strong and healthy supply chain, there are now an ever-growing number of further considerations that are increasingly on the procurement and logistics agenda – which tend to fall under three key categories.
1. Supplier and stakeholder relationships
All supplier relationships should be fostered, with the aim to achieve a real partnership. This approach brings a wealth of benefits to the organisation and its clients, including the security of supply in times of market instability, performance improvement and innovation.
Internal stakeholders should be regarded as customers too. Opportunities to collaborate should be harnessed, involving them in the decisions regarding the supply chain, where the outcome will affect them financially or operationally.
2. Ethics, sustainability and responsibility
A strong supply chain is one that is sustainable and understands the impact of its actions and the strength of the supplier-customer relationship is key in this endeavour. A strong connection with your suppliers will lead to achieving the level of transparency required to evaluate the many tiers of the chain that are common in the current climate of global trade.
With an ever-increasing responsibility to the environment and global human rights, corporations must also develop a supply base that is truly committed to a code of ethics and CSR policy.
3. Risk management
An effective procurement department will analyse and respond to market pressures, utilising its market intelligence. Additionally, robust contract management disciplines should be employed across the board, benefiting not only the organisation but also the supply base. Both aspects can provide the gateway that is imperative for successful risk mitigation, ensuring not only cost control but also performance and supply management.
The economic and environmental landscape has changed and will continue to do so. The way we conduct business has also evolved. As a procurement professional, you’re not merely securing a future for your own organisation. The management and actions of supply chains play a role in everything, from improving the standard of living, creating foundations for economic growth and jobs as well as the opportunity to decrease pollution and energy use. There is therefore a huge amount of responsibility to keep supply chains healthy.
☛ Jon Stevens is group head of commercial at Servest