What Do I Mean When I Say “Reliability Roulette”

Read Time: 4-minutes

If you’ve followed me on platforms like X and LinkedIn, you may have heard me reference something called ‘Reliability Roulette’, so let me explain a little more what I mean by it, and ways you can start to change it.

You see, many businesses don’t actively manage their supply chain risks.

Instead of planning ahead, they react to problems as they occur. Which leads to inefficiencies and vulnerabilities, potentially resulting in a supply chain which is slow and inconsistent. And a lot of firefighting…

I get it though, global supply chains are complex, approving new suppliers takes time and energy, as does managing lots of different vendors.

This is why I call it “Reliability Roulette”.

We are hoping that we get the products we need when we need them, rather than planning how to handle risks that could disrupt the supply chain…when they inevitably happen…

So, if we want to be more proactive, let’s consider the following:

1. Market Dynamics

2. Diversification of Suppliers

3. Approval Processes

4. Buffer and Safety Stock

5. Supplier Management

"There are risks and costs to a program of action—but they are far less than the long-range risks of comfortable inaction." – John F. Kennedy

Understanding Market Dynamics

Market reports and industry forecasts can provide early warnings about potential disruptions, so we can make better purchasing decisions.

I.e. product X has gone tight, lets buy more stock. Or we know that consumers slow down during the Autumn months, so let’s delay our next container by a couple of weeks.

You can go one step further and keep an eye on trends with feedstocks too (when applicable). The further you can go back, with the knowledge of how (and when) it will impact you, the more additional time you have to make decisions.

Diversifying Supply Sources

Relying on a single supplier or region can be very risky. If you think about the Red Sea crisis, or the Key Bridge collapse, these events were (and still are) disruptive, but for very specific supply routes.

So, by diversifying suppliers globally, you can spread your risk.

This is a key focus during the LOCATE phase of the CLEAN framework. The minimum aim is to find a supply option from Asia, EU, and the Americas. If you can then add back-ups in the regions too, you’re adding even more layers of protection.

It’s important to note that having the options doesn’t necessarily mean utilising them all (though I would strongly recommend you spread your demand out!)

Enhancing Supplier Approval Processes

A robust vetting process ensures that we partner with suppliers who can consistently meet our needs, even in adverse conditions. This includes things like ethics and sustainability initiatives (of course) but…

…what risk mitigation do they have in place? How diversified is their supply chain? How much buffer stock do they hold?

Buffer and Safety Stocks

Which leads nicely into applying this to your own stocks. If the supplier has X buffer stock, how much should you have? What is the lead time on fresh material?

Maintaining buffer stock is a solid step towards mitigating supply chain risks. By holding safety stock, you protect against sudden shortages and ensure continuity of production.

We are starting to get into some quite advanced risk mitigation strategies, and all this falls into the fundamental processes within the EVALUATE and AGREE stages of the CLEAN framework.

We evaluate what risk mitigation a potential supplier can offer and agree additional terms like buffer & consignment stock, information sharing on feedstocks etc.

Proactive Supplier Management

You may have worked it out all ready, but all the above means regular engagement with suppliers to discuss performance, challenges, and future risks helps to foster a resilient supply chain.

Having a strong relationship with suppliers isn’t just about getting better prices. It’s also about building trust and cooperation. Something I wrote about a few weeks ago here.

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So, what can you do about it?

Well, I tackle it through implementing the CLEAN framework. If you want to learn more about that, you can read the basics here.

Follow me on LinkedIn and/or X.

Or if you’d like some help, you can book into my diary here, and I can start to explain how working with Alchem Trading solves a lot of these problems through a repeatable structured process.

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Thanks for reading, and see you next week.

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