De-Risking Your Supply Chain – Should You Just Give In To Your Suppliers To Retain Continuity Of Supply?
Filed Under Blog
When there are problems within the supply chain it can feel as if the pressure is mounting and being applied from all sides. This means that you can feel as if you have to take drastic action to ensure that you consolidate and stabilise the supply chain. So if your suppliers are suddenly treating you as if they have the ‘upper hand’, what do you do? Do you give in to them and ensure that you can retain continuity of supply, or do you simply cut the ties and get new suppliers?
It can be tempting to give in to your suppliers, but to do so is to change the dynamics of the relationship. The relationship between the supplier and the customer needs to be a mutually beneficial one. It should be of benefit to both parties and both parties should treat each other with respect. So if your suppliers are suddenly in revolt against you and are saying that you have to change the terms of your contracts, but you think that the contracts are fair, then you cannot really be held to ransom because this is not a mutually beneficial relationship.
So if your suppliers are pushing you into a corner and you feel that you only have two choices; cut the ties or give in, then this is not a good place to be. However before you cut the ties with suppliers, it is important to fully investigate why they are putting pressure on you!
Are there any problems with regard to the supplier? For example, if they are supplying you with certain commodities has the price of these commodities risen and they are struggling with the price that has been agreed?
Is the supplier being subject to global problems? So if there is a global problem with transport, as happened with the volcanic ash being blown from Iceland in 2010? If a situation such as this has occurred then it is very likely that the supplier is not able to meet their requirements. You will also find that even if you take on new suppliers, then they would also be unable to come up with the goods.
It may also be worth trying to re-negotiate with the supplier. The supplier may be keen to retain your custom, but may financially be under pressure and so they are having to pass that pressure on to you.
However, it is still important that you do not simply roll over and let suppliers walk all over you. Business is highly competitive since the recession and as a result there is a lot riding on contracts, so you cannot let your customers down, but this does not mean that the suppliers can dictate to you.
If your suppliers are putting pressure on you, then it is likely that you have not adopted a strategic approach to managing the supply chain and the problems that you are experiencing may have been avoided if you had adopted a strategic approach.
So if you do feel that you need to cut the ties and secure new suppliers, then you should ensure that the new suppliers are managed in a strategic fashion and work with them at all stages to try and minimise any problems and sort them out before they escalate.
But ultimately remember that your suppliers do not have the right to hold you to ransom and sometimes they need to be reminded that it is a 2 way relationship or no relationship at all!