How Transparent is Your Supply Chain?

by Catherine Gutierrez The quality of the Busines Products

There are approximately 145 different types of formal and informal relationship links between buyers and suppliers[1].

With this many intricacies, supplier relationship management createsacomplex chain –where the strength of the link is related directly to the bond you forge with an individual supplier.

To further complicate things, each relationship requires a separate set of leadership and management skills. Similarly, every situation also produces a new set of benefits, as well.

Yet, each link also has one thing in common: Its ability to sever the chain witha weak connection.

Think back to the holidays you loved as a child. You probablyenjoyed a relatable task of creating paper chains. Students would string together alternating red and green strips of paper, with each circleconnectingto the next, creating a small chain. Once completed, the teacher would take the child’s link and create a superlong chainthat was hung around the room as decoration.

The result was much stronger than any student’sstrip. Likewise, each of your vendorrelationships creates a long series ofconnections. As the links string together, the overall supply chain increases in strength andits ability to produce profits for your organization.

However, just like thepaper project, a single weak link can jeopardize the entire series. One break in your supply chain leads to a disaster – of disorganized vendors and inefficient operations.

That is why transparency in supplier relationship management is so essential. To create a strong connection,you must be able to find and fixissues before they arise, instead of when it’s too late.

The first step to creating that transparency is to collect the right kind of supply chain data. You’ll want to know who your strong supporters are, and where there are links that may be faltering. If you have vendors in your system that are not following the safety requirements, compliance regulations, or processes you have set up – it can create a weak link that may damage your chain.

Once you have the data, it needs to be shared throughout the organization. The information should be collected and dispersed to all the departments that are involved in supplier relationship management – whether they arein purchasing, safety, or they’re a security guard at the site.

This helps the data to be able to verify that the supplier has a safety management system in place. It will show any quality and sustainability programs, along with additional areas, such as regulatory compliance, that may need to be strengthened before the supplier comes on-site. When all of the corresponding departments are aware of this data, and able to communicate back and forth, you can prevent any disruptions in your supply chain – by creating transparency throughout the system.

Finally, in cases where the supplier or contractor is involved in a higher risk trade, a supplier audit can also be conducted. This is perhaps the best example of creating transparency in supplier relationship management. Here, the vendor undergoes a serious and continuous assessment to ensure that he/she will play an active role in workplace safety. Contractors who do not meet the audit requirements are not allowed at the facility, and the result is a safer workplace for everyone.

Don’t reinvent the wheel. The process of creating transparency in your supply chain is as simple as it sounds. A lot of good information is already out there on how to establish a successful program. In fact, you may consider joining in an industry consortium, where supplier data is regularly shared. You benefit from this information by learning what has worked well for other companies like your own.

Additionally, think about adopting the help of a supplier relationship management firm. Retaining a companylike this will allow you to enjoy the enhanced profits and safety – without having to do all of the work yourself. Using a transparent process in your supplier relationship management will not only create a safer workplace for everyone involved, it will help you toimprove your overall profits.

References:

[1] Source: “Supplier Relationship Management Insights.” Article accessed 1/7/2013. http://www.ism.ws/tools/content.cfm?ItemNumber=20233