Will We Stand United With Suppliers?

I somehow missed this op/ed in the Wall Street Journal from earlier in the month authored by Bob Handfield. Dr. Handfield, for those who know him, is one of the foremost academic authorities on a range of Supply / Spend Management topics, from supply risk to managing complex, global supplier relationships. The gist of the op/ed is that Dr. Handfield believes that the paradigm must change regarding how we treat suppliers in the current downturn. Dr. Handfield suggests that, "During recessions, it's typical for companies to stand by as their suppliers fail -- or even to impose new payment terms that drive their suppliers into bankruptcy. Such actions are understandable. But I believe the traditional stance is the wrong one. Instead, buyers and critical suppliers should be taking rapid, significant actions to bring their businesses closer together -- both to weather the crisis and to build profitable relationships going forward with the partners that matter most."

I'd describe Dr. Handfield's prescription for change as one of active engagement, starting with pre-emptive discussions with suppliers to learn about their situation following through to decisive action -- including actions that companies might not have taken in the past. Debbie Wilson thinks Dr. Handfield's argument is, in practice, "deeply flawed" and wrote her opinion about the piece on her Gartner blog. Without getting too far into it (in this post), I think Debbie's argument suggests she's out of touch with the conversations going on in the upper echelons of procurement and finance these days regarding the uniqueness of this current recession (e.g., credit availability) and how otherwise healthy suppliers can enter a dangerous slide faster than ever before. But I'll leave that for you to decide. For me, Dr. Handfield's argument is not only thought provoking -- it's one we should all take to heart and share with our broader organizations.

Jason Busch

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