5 Considerations for Your Supply Chain Partner

Your supply chain produces value more directly than any other division of your company. Sales reps bring a product to market, leadership keeps the machine moving forward, and marketing creates a buzz. But your supply chain is the company’s lifeblood. Recognizing that, selecting a supply chain partner will one of the most important decisions your company ever makes.

There’s no exact formula for determining the perfect supply chain partner. The process will vary based on your industry, geographic area, and business model. There are, however, several common qualities you should be looking for in a partner. The five following factors will give you a litmus test for the partners you’re considering including in your value stream.

U.S. Owned

The ownership behind your potential partner will determine a wide range of factors. Are they built within the foundation of a proper legal system? How complex will financial transactions be with the company? Will communication be impeded by language or infrastructure barriers?

Dealing with U.S. owned businesses, though their operations might be in other countries, will create common ground and reduce relational complexity.

ISO Certification

Certifications cannot speak to the entirety of an organization, but specific ISO Certification can give you a reliable baseline indicator for the strength of a potential partner.

ISO Certifications are well-established and have strong impartiality, making them particularly reliable and trustworthy. Certifications shouldn’t be your only vetting agent, but ISO certifications can be at least one mark of confidence.

Customer Referrals

The best indicator of someone’s future behavior is their past. What is their track record? One of your first, and most decisive, tests should be the experiences of organizations that have worked with the prospective partner.

Ask for a list of companies that the potential partner has worked with in the past. Hand-picked references are always evangelists. The reviews of past customers will give you the clearest picture of the company’s reliability, competence, and trustworthiness.

Financials5 Considerations for Your Supply Chain Partner image financial 600x5635 Considerations for Your Supply Chain Partner

Getting your hands on a complete set of financials for a company might be impossible, but don’t hesitate to request a little extra information in the due diligence process. Understanding the position of your suppliers will help you see how you can best support one another’s position.

Specifically, try to get a sense for how much cash they keep on hand, their disaster recovery plans, and customer concentrations. Financial ratios and analysis will tell you a company’s life story, past, present, and future.

Onsite Visit

Standing face to face with someone and shaking their hand will tell you far more about their character than looking at their Facebook. Similarly, visiting a potential partner’s facilities in person will speak volumes to their true capabilities.

Look for the infrastructure that they have in place. How automated are their facilities? What controls are visibly in place? Maybe most importantly, does it look like the company can easily scale up or reduce their operations to match demand?

Optimize your supply chain to create the most value possible from the start. Choose partners that will be advantage drivers rather than encumbrances and you’ll create a company that stays lean and nimble through any economic challenge.

Video – The Importance of Supply Chain Risk Mitigation

We are curating a conversation about supply chain risk at costflexrisk.com.  We put this video together to highlight the impact of supply chain risk in the news.  Please take a look and then let us know what you think at @GSCSOptimize:

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