Supply Chains are Relationships

From:

Kelly Roberts

President

Parts Inc.

Dear Clark Benton,

I am writing you regarding your communication on the 13th of March. It has come to my attention that Better Corporation has at best been a difficult company with which to do business. Best Corporation has a history of noncooperation, such as not providing needed production forecasts, constant demands for price reductions, and increasing bureaucratic requirements. It pushes Best Corporation's costs down on Parts Inc., making it challenging to provide Best Corporation with even nominal service.

Parts Inc. has always prided itself on its customer service and ability to deliver market pricing. As a supplier, Parts Inc. uses a teamwork philosophy. Our goal is always the success of our customers. To succeed, the customer has to be a willing partner in its own success. In my opinion, Better Corporation has not been a willing team partner in ensuring its success.

The ongoing pandemic exposes the weakness in the compliance methodology exercised by Best Corporation. With study, you will find that supply chains based on compliance rely on rules and late fees for supply chain issues; this, in turn, leads to adversarial working relationships rather than problem-solving relationships. Most of all, compliance as a tool eliminates trust from the supply chain, and compliance assumes the supplier is not to be trusted.

Suppliers in the compliance supply chain find themselves alone on an island created by their customer's lack of foresight and complacency. In this scenario, the supplier is the creator of all problems. The customer does not look at their own bureaucratic mess, causing a leadership shortage and direction. Companies such as yours begin to develop a; we are the adult, the supplier is the child attitude.

In general, suppliers will adopt the example set at the top of the chain. Issues starting at the top get magnified as they go down the chain. The compliance standard keeps becoming the downstream standard, creating a chain with many weak links.

Quite possibly, the most disturbing aspect of the compliance methodology is its ability to turn people into numbers for profit maximization. Suppliers are not numbers; they are people's hopes, dreams, and aspirations, just like the employees of your own company. People purchase from your company, and people supply your company.

I can see your mind churning, but supply chains are complex, and we must control the entire process. My reply to that is they are as difficult as you make them. Supply chains become complicated when you begin requiring suppliers to comply with requirements outside of the objective which is on-time delivery of parts that meet your companies specifications. Supply chains become questionable when there is no free flow of information necessary for the successful delivery of parts or services. Supply chains become problematic when the top of the chain is a manager, not a leader.

We all know that contracts in business are necessary. Increasingly what constitutes a well-written contract is misunderstood. Rather than creating a framework for the successful delivery of parts and or services, contracts are over-restrictive compliance-driven documents. Contracts rather than being restrictive documents should be written to provide the supplier a framework for successful job completion. The Covid pandemic has exposed restrictive contracts and their role in the inability to be creative in keeping the supply chain moving. Moreover, if a company has not been a good customer, the supplier will use the restrictions in the contract not to go above and beyond to solve problems.

Our supply chain is an example of how cooperation works. We are working with our suppliers for their success and our own; they work hard for us during these difficult times. I do not believe that the same can be said for Better Corporation and its supply chain.

While Best Corporation is our largest revenue generator, at the same time, it is our least profitable, with a near guarantee of shrinking future profits over time. Therefore it is in the best interests of Parts Inc. to move on from Best Corporation.

Parts Inc. will no longer accept Best Corporation purchase orders beginning on 10-23, giving Best Corporation enough time to find replacement suppliers.

Best Regards,

Kelly Roberts

President

Parts Inc.