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At an advantage with stable supply chains

At an advantage with stable supply chains

17.03.2022 "interim management konkret"

If you take a close look and deal intensively with your supply chains, you will have an advantage with stable solutions in the future. Interim manager and supply chain expert Beat Buser advises dealing with questions such as "Do I know my supply chains, the processes and dependencies of my suppliers (and their suppliers)?" and «Do I have framework agreements with defined material availability from stock?».

At an advantage with stable supply chains

Beat Buser, how do you assess the current situation: Will the supply crisis soon be over?

It will subside, but I am afraid it will keep us busy for quite a while. Since the crisis is mainly based on a storage or transport crisis and not just on a production crisis, it will take time for the domino effect to dissipate again. Until then, day-to-day business is still in crisis mode and you have to fight your way through, bearing all the consequences. 


Is there any good news?

Definitely! The crisis has shown us weaknesses very clearly. Those who take a close look now and deal intensively with their supply chains can look for stable solutions and will have an advantage in the future. 


How exactly do you improve the situation?

In general, there are always dependencies on (mostly Asian) suppliers or on suppliers from countries that are geopolitically critical, both directly and indirectly. Specifically: Even if one's own supplier comes from a supposedly stable environment, it can in turn be dependent on a supplier from an unstable environment. Therefore, companies must answer the following questions:

• Do I know the supply chains and the processes and dependencies my suppliers (and their suppliers) use? 
• Do I have real cooperation agreements with my suppliers? Specifically: Are there framework agreements with defined material availability from stock?
• Have I developed a real "multiple sourcing" strategy, where my suppliers really use different producers and not just dealers from the same sources?
Where (geographically and geopolitically) are my suppliers located? Am I aware of the associated risks?

Particularly important to know: In the event of bottlenecks, material is often absorbed by wholesalers or financially strong corporations because they are served first due to comprehensive framework agreements. This usually hits SMEs particularly hard. Therefore, cooperation and framework agreements are of great importance. 


And how do I negotiate such a contract?

Suppliers usually want their customers to have a certain level of planning security. In order to be able to guarantee this, well-established and up-to-date maintained planning systems (ERP) are important. When negotiating, it is not just about the best price, but about a holistic view of the costs, a so-called TCO: Total Cost of Ownership. The best thing: If a supplier knows about guaranteed sales and a reliable partner, they are more willing to work with a smaller company at a good price. The magic word is cooperation instead of market power. 


What if I notice during the analysis that my supply chain consists of many links?

In this case, I strongly advise working towards a less fragmented supply chain. Enter into a few strategic partnerships with value-added, efficient and trustworthy partners who come from a stable environment. Analyze the market, talk to good delivery partners in your industry, exchange ideas. 


How can interim managers support this process?

Working with interim managers can be useful and valuable both in the case of a supply chain that needs to be adjusted and in contract negotiations. They bring their experience and knowledge to bear quickly and efficiently, be it with questions about the Asian business environment, geopolitical dependencies or specialist processes. In this way, it will soon be possible to establish a supply chain that works even in times of crisis.



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