Your Supply Chain’s Sputnik Moment

On Tuesday, President Obama delivered his annual State of the Union address. Rhetoric and politics aside, Obama portrayed our current status quo as failing to lead in an ever-competitive global marketplace.  Left on this current path America will simply fail to win the future.

As a solution, Obama challenged America to create “Sputnik” moments where new innovation would break through historical obstacles.  “We need to out-innovate, out-educate, and out-build the rest of the world.” was Obama’s battle cry to action.

Now is an excellent time to apply that same “State of the Union” thinking to our Supply Chain relationships.  How can we create internal “Sputnik” moments with our employees?  Who in our organization owns this role?  Do we encourage or discourage our suppliers and customers from innovating?  How do we even begin?

First, let’s start by thinking about our traditional supply interactions.  Last year, The Mpower Group presented a radical innovation—leading companies need to focus on creating new sources of value rather than beating down suppliers on cost.   This major shift in thinking provides a new foundation for encouraging innovation and collaborative relationships.

Imagine in a negotiation where the supplier was asked what they would do with a $250,000 check on top of their existing bid.  Progressive suppliers worth dealing with should give concrete examples how that investment would be used to improve quality, buy machinery, hire people, etc.  Conversely, if suppliers don’t have any novel ideas then we have a much better picture of what they have to offer in the long term – zero.

Next, let’s think about education.  Traditionally, companies think about their current institutional knowledge base and where they need to be to compete in their market.  While this is laudable, it misses out on a crucial innovation dimension—what the world is doing.

Our cross industry experience as consultants allowed us to challenge the status quo with real companies and real examples.   One that comes to mind is a client that felt it was “state of the industry” with a one week delivery lead-time for in-stock items.  We pointed out that while one week delivery may be “leading” that industry we could give them examples of next and same day delivery in other sister industries.  Viewed against that different performance standard they realized that they could potentially charge higher prices and deliver higher service to those customers who wanted things faster.

Lastly, let’s cover infrastructure.  Traditionally we think of infrastructure in term of bricks, mortar, systems, and capital equipment.  While these investments often provide excellent returns, we believe the best return going forward is to empower your employees and supplier relationships.  “Supplier churning” and employee turnover, while hidden, are as equally damaging as a decrepit piece of machinery or a leaky roof.

As part of our commitment to pushing this community forward, The Mpower Group will be presenting new “Sputnik” techniques for companies looking to innovate and deliver outsized results.  Until then, what is a “Sputnik” successes story for you?  Share with other readers those obstacles that prevent major breakthroughs from occurring and some ideas on  how to overcome them.