Changing a key supplier is a big decision which, if not handled correctly, can be catastrophic. Bronagh Sproule (La Palette Rouge), a specialist pallet pooling operator in the FMCG sector, offers advice on reducing risk and making sure you are getting it right!
Rising supply chain costs in FMCG, driven by Brexit and COVID-19, have been reported extensively over recent months. As a result, many will be scouring their pre-and post-production supply chains to identify where savings can be made.
The opportunity to save money and add value to your supply chain by changing your supplier is enormous but is not without its pitfalls.
Here are 10 tips to consider before making the change.
1. Do your homework
How many players are there in the market you are interested in? Engage early with your shortlist.
Even if you feel you are not ready for a full tender just yet, a proactive and engaged supplier will be prepared to take a consultative approach to your business, helping you to shape and define what you are looking for.
2. Involve everyone
Changing a supply chain partner is not a decision that can be taken by procurement alone. From your warehouse operatives to your accounts team, the switch will affect many people.
Talking to them early on will also help you to understand the challenges affecting them, and whether you have more than just a cost problem.
3. Give a clear brief
Take the time to fully understand your own supply chain, from end to end.
That includes your suppliers, your co-manufacturers/packers and your larger customers, as well as your other partners in logistics and even production.
Rushing this process may lead to inaccurate or incomplete proposals, or even nasty surprises during implementation and beyond.
4. A consultative sales process
It is easy for suppliers to talk about proactivity, agility, flexibility and innovation at their first sales pitches. Are they able to prove this, though, during what might be a long process?
Look for someone that you feel is really listening, and wants to understand your business.
Without getting under the skin of all your supply chain peculiarities at this stage, how can they expect to deliver a smooth implementation and BAU? Do they meet your deadlines and are they responsive to requests? Demonstrating agility and flexibility now is a good barometer of how they will respond to the inevitable hiccups of running a supply chain operation.
5. Matrix relationships
You have already involved the experts from your side, but is your prospective supplier doing the same? If you are important to them, they will. Make sure an opposite number has been introduced to all your key stakeholders.
6. Implementation
Planning is everything. Find out what experience your prospective partner has of managing implementations on the same scale as yours.
Ask to see a project plan: have they considered everything? Have they proposed clear communication and management channels, and demonstrated ownership?
7. IT
IT systems will add a level of complexity to any major implementation. Consulting your IT team early on in the process will be a very good use of your time. Failure to match existing order processes to new systems is typical of the teething problems experienced in a new supply chain partnership, so thorough testing is vital.
You will also need to ensure that the level of automation that exist in your warehouse and production areas is compatible with the product or service you are buying.
8. Business as Usual
It is important to find out how your proposed partner is going to manage your contract going forward. Do they have a team ‘on the ground’ that you will be able to meet with, build a relationship with, and call upon for advice and support?
Find out what KPIs they propose, and how they manage quality, both of service and product (if applicable). Ensure that they will share KPI performance with you regularly, as well as provide you with the means to access management reporting in your own time.
9. What if ...
Think beyond the implementation, into all the ‘what ifs’ of your supply chain. Think about equipment failures, customer demands, seasonality, and about external events beyond your control – what if there is a further wave to the Covid-19 pandemic?
Then think about all the ways you would need your partner to respond to the unexpected, and make sure they have the necessary processes in place to manage contingencies?
10. Prove it
Any prospective supplier who really wants to work with you will be able to offer you a number of ways to prove, not just promote, their capabilities.
For example, they can invite you to visit existing sites and talk to their current customers. It may seem like a lot to think about, but this is your opportunity to make sure you have a true partner, something we all need in an uncertain world.
To hear how LPR can help you safely change to a new pallet pooler, contact: [email protected]
© 2021 Checkout – your source for the latest Irish retail news. Article by Bronagh Sproule. Commercial Content. For more supply chain news click here. Click sign up to subscribe to Checkout.
