Suppliers – You Can’t Live Without Them!

July 27, 2022 / by Richard Whitteron

Great relationships and open, honest communication with suppliers can reduce daily pain

These are unprecedented times with challenges we have never seen before. Maintaining a continuous supply of raw materials has become increasingly difficult since the start of the pandemic and with the on-going geopolitical uncertainty. The recent rise in oil prices is also increasing stress on everyone’s supply chains.

There is mounting pressure on procurement and materials planning teams to reduce supply issues and to adapt supply chain processes to monitor and communicate shortages to customers and suppliers. Supply issues have ranged from:

• Personal protective equipment (PPE)
• Glass
• Plastics
• Chemicals
• And most importantly, people!

Make yourself known
All of this has resulted in longer lead times, capacity constraints and intermittent supply deliveries. With the need to work more closely with suppliers, having the right contacts and understanding their prioritization process is key. The traditional model of dealing with sales representatives has its limits. Sales reps often do not have visibility into their company’s own supply chains, so it would be worthwhile to ask them if they are able bring their demand planners, supply chain executives, and master schedulers into the loop to ensure all processes are coordinated.

Suppliers have ways of rationing to meet demands, but most still give top priority to orders for materials used on COVID vaccines. Beyond that, they usually fulfill human drug orders first, followed by animal medicines. They also often have prioritization teams, and it is a good idea to establish contact with those teams and make yourself known.

It is also obligatory for your procurement teams to clearly communicate their needs and required delivery dates, notifying suppliers of when shortages will halt manufacturing. At the same time, you must also share your future material requirements. Sharing forecasts has become more critical as suppliers try to expand their capacity.

Coordination is key
It is no longer enough to wait for a supplier to provide availability dates. It is necessary for material planning teams to take the lead, perhaps reviewing orders line-by-line in weekly or, if needed, daily meetings with product providers. Escalation processes need to be established to help resolve issues efficiently and effectively.

Additional financial commitment may also be required. Purchase orders should be placed further into the future, often more than a year in advance of the need, to help maintain continued supply. You must coordinate with your own sales teams to expand demand-planning horizons and to ensure an accurate forecast of client needs going forward, using more rigorous sales and operations planning processes.

In these times, your suppliers are an integral part of success. Let's help them help us by sharing information and more closely aligning our businesses. Direct cooperation and better communication ensure we can quickly react to today’s supply chain challenges.

• Want to learn more? Contact Richard Whitteron with your questions
• Have an idea for a topic? Let us know!