Investment in steady supplier relationships that minimize firefighting is a high-leverage use of time. For today’s high-impact managers, time is the scarcest resource. When you’re fighting fires and responding to crises related to late supplier deliveries, you and your team aren’t working on productive endeavors to further your company's or your customers' long-term strategic goals. This results in investing resources in contingency planning activities that do not create direct value for your end customer. Without having the confidence that the necessary materials are going to be on-time, where they need to be and within specs, teams within your organization will end up making ad-hoc, low-information assumptions to compensate for systemic uncertainty caused by your supplier.
At the heart of it, world-class supply chain leaders understand the value of establishing trust, communicating clearly, and that a foundation of outcome certainty is central to ensuring a lean and efficient supply chain. Working with reliable suppliers minimizes the impact of the bull whip effect on your production processes. The bull whip effect happens when consumer demand for a product changes, prompting companies in a supply chain to order more products to meet the demand. This is important for many reasons. No matter the quality of your company's product, your customers will not buy it if you can't deliver it on time. Very few - if any - companies have the luxury of being late on final product deliveries while simultaneously being able to keep their customers satisfied and coming back for more over the long term. It's essential for your suppliers to keep their end of the deal and deliver materials on time so you can keep your production process on track.
While we’re all aware that on-time delivery from suppliers certainly has value, it’s important to remember all the ways it can impact a company’s resources, and therefore, its bottom line. In today's business world, outstanding quality, cost and delivery are a market expectation that must be met. As the pace of business continues to quicken and your end customers expect continuous improvement, making sure your supply chain allows you to meet your product delivery commitments is a key performance indicator that separates successful companies from those who can’t keep up.