More often than not, we deliver goods and services to our customer, that we don’t produce from scratch in house. Be it as big as power plants or paper mills, or as small as the local gym or a hipster coffee shop chain, we have multiple different companies, suppliers and vendors, that contribute to the value chain we manage. But at the end of the day, it's us that our customers hold responsible for the unique, extraordinary product and service they are paying for.
How do we manage this value chain and how do we make sure it won’t let us down?
If you’re not auditing your suppliers (you want to have more than one to hedge yourself against failures) and evaluating them, you definitely should start immediately. Here's how to get started.
- Have a clear picture of your supply chain
- Have a checklist to audit all the stages of it
- Have a schedule and a process in place
- Nominate a person that's responsible
- Make sure all the data is analysed and actions are taken accordingly
I’m assuming you understand the importance of being on track with your suppliers and having a system in place. If you have a software solution that you have in-house to fit your specific needs, you are ahead of the game. But chances are you don't.
Would there be a better solution than starting a software project?
First of all. Having experts on-site auditing with their pen-and-paper forms, attaching images from dedicated devices, and sitting at their desks filling Excel's to compose reports from the findings is a) inefficient and b) last millennial. You should definitely go digital as it will both save your workers time and resources, but also provide you automatically the statistics and findings you want. If you want to educate yourself more on this matter, check this blog post and navigate to planbrothers.io.
Okay back on how to manage your supply chain.
Usually, you will have a supplier, that has a supplier, that has a supplier. First, you have to decide how deep you want to go.
If you are e.g. in clothes & apparel retail business, the end customer will appreciate you going down to the ”which farm farmed the goats that produce the wool that the angora pullover is produced from”. As you are not responsible for their compliance, your audit will be fairly light. But the chain to get to them will be long.
You will obviously audit the supplier, you buy the goods from, and maybe even the company that takes care of the transportation. But what you can do, is require reports about their business.
However, you will have to process all the reports (and they can be very different), to get the data out that you need. Well, you did until now.
There are various solutions that you can start using and require your suppliers to use for their internal audits. That cohesion enables you to get a live dashboard of the situation. Also, you can have your auditors use the same system so you can cross reference the results and point out fishy results.
A good rule of thumb is to have your suppliers audit themselves at least quarterly and you to audit them annually or biannually. If any changes in processes occur, a more frequent schedule might be in place.
If you want to broaden your knowledge about why managing your supply chain matters, check out our new blog series about the VUCA framework. There we talk about the volatility, uncertainty, complexity and ambiguity of the modern business landscape, and what it takes for a business to succeed. We also have a FREE case study, if you prefer a more concrete real-life approach:
We're a tech company with a passion for helping our customers adapt to the fast changing VUCA world. We're doing that by developing easy-to-use SaaS products that make gathering, managing and analysing field information as easy as possible for the end users. Remove gatekeepers, go horizontal and learn from your mistakes before they actually happen. More info at planbrothers.io.