Sourcing and Supply Chain Strategy

The contentious drama between sourcing and supply chain strategy.

Dr. Frazelle shares an all too common story of sourcing and supply chain tension from his recent book titled, Supply Chain Strategy.

“I have led more than 300 supply chain seminars and conference programs. I have had only one situation where attendees were literally willing to fight over an issue. It was the head of sourcing for one company and the head of supply chain from another.”

I have led more than 300 supply chain seminars and conference programs. I have had only one situation where students were literally willing to fight over an issue. It happened when I was teaching our RightBuys seminar. One of the students was the head of sourcing and procurement for a large auto company. In the prior month one of his company’s assembly lines was shut down for a couple of days because of an interruption in the supply of car seats. As it would happen, another student in the class had custom ordered a car from that company that was supposed to be produced during those same days in the factory where the shutdown occurred. Evidently, the student needed the new car to impress a friend or business associate. In anger and in retaliation over not receiving his car on the day it was promised, he decided to try to humiliate the auto company’s head of sourcing by loudly elaborating on the supply chain deficiencies of the auto company. The procurement chief was quick to defend himself and his organization. When the disgruntled customer started to speak again I worked to politely calm the nerves. When he and the procurement chief continued to debate under the tone of my lecture I finally had to ask them to either step outside or dismiss themselves from the seminar. Can you imagine a high noon draw over a car seat?

Sourcing and procurement decisions set up the supply chain for ultimate success or failure. Unfortunately, the professionals who work in those areas are the least likely to be educated in supply chain management, and are the least equipped with tools to work through the difficult trade-offs in sourcing and procurement. I remember being so surprised and encouraged the day the head of sourcing and procurement at Honda called, and asked that we lead them through our full set of supply chain courses. I knew they were headed to a good place in their supply chain if those folks could understand the 360 degree supply chain ramifications of the decisions they were making. Sure enough, not long after the training, Honda’s supply chain performance began a dramatic turnaround. They surpassed Toyota and every other auto company in nearly every aspect of supply chain performance.