8 Key Tactics for Developing World-Class Supply Chain Part II

In part one of our guide to developing a world-class supply chain, we discussed tactics such as setting ambitious goals inspiring innovation and defining all costs up front. Here, we'll dive into a few others that can help your supply chain succeed.

5. Build Up a Buffer Inventory

One tactic that can help you stay ahead is to build a buffer inventory for your supply chain. This includes surplus stock of products or materials that help you navigate any events that might otherwise hold you back. For instance, you might benefit from buffer inventory if you see delays in transportation or other types of emergencies that compromise existing inventory. In other cases, you might see an unexpected increase in demand that warrants having excess inventory.

Your supplier should be able to help you calculate buffer stock using the most appropriate calculation method.

6. Gain References for the Supplier Companies and Determine Reliability

Many small entities struggle with developing world-class suppliers because of a lack of initial insight into potential partners. Before settling on a supplier, you should take the time to find references for prospective suppliers and gauge their reliability. You can do so in several ways, such as:

• Join and actively participate in trade groups within your industry.
• Determine what types of customers use each supplier and why they use them. Take a look at your competitors and see what supplier partners they have. 
• Learn about ways other customers have managed to navigate and resolve issues with big suppliers with whom you don't appear to have leverage. You may discover certain options and innovations that benefit you if you're facing any unique challenges in your supply chain.
• Develop a network of others in your industry who can help if you need assistance, including contacts you might gain via platforms like LinkedIn. In addition, you can join one or more trade associations that give you access to certain forums and member areas to brainstorm and request further assistance. For instance, many small businesses use Vistage, which matches CEO members to relevant peer groups.

7. Don't Be Afraid To Take Your Business Elsewhere

In some cases, even after performing due diligence, you might end up with a difficult supplier that's hurting rather than helping you. If this is the case for you and you don't have any other suppliers, you should begin planning accordingly. You can start your transition away from this supplier by building a bank of inventory and connecting with another more reliable supplier who can help you in the meantime.

If a supplier is treating you poorly, you likely aren't alone in this—the same supplier is probably treating other customers the same way. If they're not capable of changing or are unwilling to change, they may go out of business after you and other customers leave them. Under these circumstances, it's often better to leave at the time of your choosing before you're simply out of options.

8. Do Your Homework

If you decide to work with a different supplier, do your homework like you would when initially seeking a supplier. This would entail asking about references and following up with those references. Also, ask about on-time delivery, volumes, and competition. Take the time to visit the supplier's facilities and get a better feel for their capabilities. The ideal supplier should also make it clear that it shares your vision and will help you achieve those big goals you have set.

Taking these steps will go a long way in helping you build a world-class supply chain with the help of healthy supplier relationships. As you achieve your goals and scale operations, you'll ensure you stay competitive and keep your end customers satisfied.