Good companies cruise through recessions, great ones learn from them. If there’s one area that seems to be analyzed and optimized whenever markets slow, it’s the supply chain management and logistics, and it’s easy to see why.
On a rainy Monday morning, a purchasing manager entered his large office and took a seat at his desk. Coffee in hand, it was time to go through the weekend e-mails, and among the usual notifications and documents, two emails stood out. Emails from goods suppliers, notifying him that their prices have gone down again this quarter, and that he’ll be glad to see a lower sum than usual on the invoice at the end of the week.
Without a blink, he forwarded the messages to account managers, checked how the lower costs impact the quarterly budget, and leaned back with a smug grin. Rainy days do look better when your job pretty much does itself.
The purchasing manager, of course, had nothing to do with the price reduction. The suppliers simply saw one of their competitors somewhere in India lower his price, so they jumped to let their favorite account know that they’ll be offering that price themselves.
Supply chain as an asset, not a barrier
It’s hard to believe that the salesman would be eager to drop his price, but this happens far more often than we would expect. Many producers and retailers around the world get this five-star treatment from their suppliers, and they have one of two things in common.
First, most of them are powerful. Yes, when you’re as big as Wal-Mart or Siemens, your suppliers stop bleeding you, and start thinking about how to make you happy. They employ legions of people to come up with discounts, special offers, better services, anything to keep you satisfied.
The second thing they have in common is supply chain management. Wal-Mart is known for getting the best deals from their suppliers, not because of size, but because of flexibility. If Wal-Mart’s purchasing department gets a better price than the one you’re offering, they’ll have you replaced in 1 hour.
They not only can do it, they will do it because it costs them next to nothing to pull it off.
Which supply chains are at an advantage?
The sharpest players in the market are using supply chain optimization as a bargaining tool, and labeling is one of the cornerstones of this system. Quite famously, it was Wal-Mart that caused the global expansion of the modern bar code, when it demanded that every package entering their warehouse should be equipped with a standardized bar code label.
When a shipment enters a cutting-edge distribution center, it doesn’t matter if it’s a pallet of apples, a truck of televisions, or a ton of raw meat. Every single shipment is equipped with the same standard labels, and the path of the shipment and business data that accompanies it is mostly automatic from there on.
Are there obvious solutions we’re missing?
This dominance over one’s supply chain isn’t exclusive to the biggest companies out there. They simply invested millions into these operations in the past, and they’ve developed highly efficient logistic systems.
Luckily, the evolution of techology and the Internet now allows every company to access the benefits of efficient supply chain management. Shipment labeling systems, for example, can be placed online, and you have the opportunity of requesting unified labeling from all your suppliers. They can print labels straight from their browsers, and the usual barriers of cost and time are a thing of the past. While they may have resisted labeling your shipments in the past, they should have no problem with simply clicking a button on the Internet.
Why are you still reading this?
Reach out to your suppliers and offer them the most efficient shipment labeling method available. Your logistics will be more reliable, they’ll cost much less, and most importantly… On those rainy Monday mornings, you’ll open your email expecting good news.