New research serves to highlight how important good relationships are to the smooth running of retail supply chains.
A recent survey from CIPS shows that only 11% of supply chain managers maintain a close relationship with their suppliers. The majority of those surveyed either have relationships with tier one suppliers only, or don’t have any relationships at all.
Close relationships between suppliers can help prevent unpleasant surprises and disruption when something unexpected occurs but, perhaps more importantly, companies that don’t have good supply chain relationships have no real visibility, can’t know their full product providence and won’t always be aware of any potential breaches down the chain.
The research found a direct link between poor supply chain relationships and regular disruption in the supply chain in the UK. Two thirds of supply chain managers with strong relationships up to three tiers and beyond say they have avoided a major crisis in the past 12 months, while this figure is only 45% for those supply chain managers who have relationships with tier one suppliers.
The research also showed that two thirds of the UK supply chain professionals asked don’t have or are unaware of a risk mitigation strategy that covers all tiers of the supply chain.
These figures all suggest that UK businesses are still unprepared for a potential supply chain crisis despite the horse meat scandal occurring only two years ago, and better relationships are desperately needed.
So how can retail supply chain directors improve supply chain relationships? There are several simple steps that can make a big difference:
- Open the lines of communication – create a way suppliers can talk directly to you and one another such as an online forum or dedicated supplier conference
- Use technology to encourage transparency
- Establish a supplier code of conduct that is shared with employees and suppliers – this way all parties know what is expected of them
- Take a collaborative approach
- Ask your supply chain for their input – particularly when trying to solve a problem that involves them as they will probably have more insight and come at the problem from a different angle
Improving supply chain relationships is vital for retailers trying to succeed in a multichannel world and, as the research shows, there are negative consequences for those who don’t foster good relationships.
The CIPS Supply Chain research is based on an international survey of procurement and supply chain executives in the UK, Australia and South Africa.