Strengthening Supply Chain Reliability

Read Time: 3-minutes

Today I’m going to unpack the ‘AGREE’ stage of the CLEAN Framework a little more, and ways we can build in more strategies to strengthen our supply chain reliability.

Ultimately, we want less disruptions and more consistent product availability which is crucial for our business success and customer satisfaction.

Traditionally, people negotiate a volume, an incoterm, and a price.

Rinse and repeat. (Okay, I know there is more nuance to it…)

But what if we also consider:

1. Stock

2. Feedstocks

3. Strategic Sourcing & Procurement

4. Contracts

"Success is where preparation and opportunity meet." - Bobby Unser

Managing Stock and Safety Stock

Getting stocking and safety stock right, is essential for ensuring you always have enough material to meet demand.

Okay – that’s obvious.

This is normally where I see it end though.

If you are ordering a specific product regularly, and predictably, why do you have to stop there?

What about:

• Consignment Stock: Keep inventory at your premises without paying for it until it’s used. Reducing upfront costs and improving cash flow. Ensure clear agreements with your suppliers regarding stock levels, replenishment rates, and payment terms.

• Third-Party Safety Stock: Have your suppliers or third-party logistics providers hold additional inventory for you. Adding an extra layer of security against supply chain disruptions. Regularly communicate with your third-party partners to ensure they understand your needs and can respond quickly to changes.

Regularly review your stock levels and adjust them based on demand forecasts and market trends.

Looking at Feedstocks

Are there specific feedstocks used to produce your product? If the answer is yes, then you need to keep an eye on them as well. Particularly if they have a significant impact on the price or availability of your product.

If you learn there is a tightness of a feedstock, then it may be worth ordering additional material as soon as possible. Maybe you have the experience to know it will pass.

Either way, you have much more time to make a proactive decision, rather than simply following the market when the time comes to order again.

You could even link your pricing to feedstock pricing, or ask that the supplier maintains a level of buffer stock of the feedstocks too.

Strategic Sourcing and Procurement

The above is of course a great example of strategic procurement. Basing your decision making on market dynamics can significantly boost your reliability, so why not negotiate certain expectations?

For example, in exchange for an extended contract or higher volumes, you’d like a weekly/monthly conversation around market/feedstock dynamics/conditions.

Effective Commercial Contracts

Creating commercial contracts that include specific performance metrics can help ensure reliability too…

For example, contracts tied to volumes and minimum requirements for suppliers, such as a 95% on-time delivery rate with penalties or rebates for non-compliance.

These contracts provide clear expectations and incentives for both parties to maintain high standards.

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So, there you have it.

By investing a little more time into negotiations, it’ll help you build a more reliable supply chain, ensuring that your business runs smoothly, and your customers are always satisfied.

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Thanks for reading, and see you next week.

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Whenever you’re ready, there are 3 ways I can help you:

1. Take the CLEAN Scorecard - test your supply chain. In less than 3-minutes you’ll receive a free personalised report detailing areas where you are strong or weak, and ways you can improve.

2. Follow my YouTube series introducing the CLEAN Framework - learn how to build reliable, ethical, and sustainable supply chains.

3. Book a 15-minute introductory call to see if we would be right to work together.