As 2017 is coming to a close I find myself thinking about the supply chain challenges that several of my clients were facing this year. And from this reflection whether there was anything I learned that would be useful for other managers in their own businesses. One thing that came to mind was in regards to a common thread among the engagements. And that common thread was how going back to basic fundamental supply chain principles made such a difference can make on my clients bottom lines.

It’s quite understandable given the number of executive priorities in any given year, how difficult it really is for a Supply Chain Manager to meet all of their obligations and serve their customers and employees. It’s no easy task to say the least and managers have to think strategically how they will apply their resources. Focusing on fundamental principles of supply chain can often get lost in the pressure cooker of a results-driven culture. Here are examples of how focusing on fundamentals, going back to basics, made a difference for my clients this year:

Hold Your Suppliers Accountable: Many clients have well established supplier management programs. Even so, as time passes, and as a comfort level sets in, suppliers are often not held accountable to their original contract terms, pricing and service levels. However, holding your suppliers accountable is one of the most effective ways of maximizing your investments in the goods and services you are purchasing. For one client, a renewed focus on the cost to serve and a reduction in repeat repairs from their third party service providers, saved them quite a bit of money.

Listen to Your Suppliers: Suppliers know their business very well, and they pay close attention to how you conduct yours too. Your best suppliers will have lots of ideas that can help take costs out of the system. Listen to them. In fact, reach out to them and ask them for ideas to reduce costs and improve performance. It’s not uncommon to even make cost management a part of their contract so they are accountable for helping you reach your own cost reduction goals. I was helping one client through a Strategic Sourcing initiative of their Maintenance and Repair Operations for parts and services, we explicitly asked for recommendations on how we could reduce costs. The winning supplier had great recommendations to streamline the clients warehouse, and reduce the number of SKU’s. Listening to your suppliers is virtually free consulting with an infinite ROI.

Align your Governance Structure: Take a moment to reflect on whether the parties being held accountable for performance of your supply chain are also the ones who both benefit when things go well and feel the consequence when things go wrong. For one client, we found that the commercial group had few ordering safeguards to prevent them from driving up inventory levels, but it was the supply chain group that had to carry the burden. With the addition of some well-thought out policies and procedures (based on fundamentals), we came up with recommendations that would both lower the cost of inventory and obsolescence, and still maintain the desired customer service levels.

Fix Low Hanging Fruit: It’s very likely that leadership already has a good idea of the major issues they are facing, and how to fix it. Several reasons can contribute to this, but in my experience it’s often due to a lack of time and resources. Indeed, I’d venture to guess that half of my consulting business has come from clients who didn’t have the bandwidth to objectively problem solve troubling issues and drive solution to implementation. Most recently I was asked to help solve 12 different initiatives that had been on the back burner for quite some time but finally had to be dealt with. I think you might be amazed at how many small to medium-sized issues, with relatively simple fixes you would find in your organization, and how quickly the benefits of solving those would add up.

As simple as it may sound, going back to basics does not mean things will be easy. It does take time, effort and needs to be prioritized by the leadership. Senior Managers have to juggle so many things that it can be difficult to keep ones attention on fundamental principles. But before you are forced to bring in consultants, consider what it is that you can do now, within your own power, to help improve your performance by applying some fundamental supply chain principles.

Have a very Happy Holidays and Happy New Year from The Prokür Group.