Strong supplier relationships can play a vital role in ensuring resilience and agility in a global supply chain.
As we have seen time and again, supply chain challenges are not a matter of ‘if’, but ‘when’. Whether it is a natural disaster or geopolitical instability, the unfortunate reality is that the world’s supply chains are geographically complex and exposed. What may be considered a localised regional event can have far-reaching consequences; at the same time, nearshoring does not wholly avoid such risks, either.
In our 20 years of experience in delivering premium logistics solutions, there is one factor that has frequently delivered immense and immediate benefits in the face of crises – strong supplier relationships. A level of familiarity and harmony between an OEM and its suppliers builds upon the fundamental reality that businesses are made up of people, and people with good relationships help one another.
In the wake of the 2011 tsunami and earthquake in Japan, Toyota’s production fell a staggering 78%. It prompted a review of what could be improved – it came back to rapid supplier evaluation and communication.
″We looked into multiple tiers of our suppliers and created a system that enables us to find out which suppliers and what parts are at risk in the early stage of a crisis. When we confirm situations with suppliers, we provide suppliers with a sure and reliable production plan for the following several months, and sometimes a three-year forecast.”
Kenta Kon, CFO, Toyota Motor Corporation
Emphasising mutual growth, earnest communication, and working to a shared plan not only ensures that an OEM has what it needs, but also that its supply chain has the understanding and sense of security to follow through. Such harmony allows businesses to respond promptly to disruptions and maintain seamless operations.
Another example of supplier relationships under pressure comes from Boeing and the fallout from the 737 Max programme. Despite the complete halt to production and international investigation, when the time came to resume, Spirit AeroSystems, Boeing’s Tier 1 structural ‘shipset’ supplier was able to ramp up production with minimal delays and disruption.
Investing in supplier relationships at both a business and personal level can pay dividends during a challenging period. Such relationships transcend mere transactional exchanges, instead creating a shared commitment to problem-solving and mutual understanding.
At the same time, the ability for suppliers to quickly overcome challenges means little without the logistics support to match. Whether it is providing emergency solutions or working with suppliers to develop robust contingency plans during ‘peacetime’, a dedicated emergency logistics partner can prove invaluable in a crisis.
Cultivating strong supplier relationships can bring a wide range of benefits, especially in enhancing an OEM’s supply chain resilience. Going beyond contract obligations can seem like unfamiliar territory in 2023, but collaboration, mutual benefit, and taking the chance to build business and personal relationships can deliver lasting advantages and satisfaction for all involved.
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