Spend Friends podcast: Supply chain resiliency comes from people and sharing information, expert Steve Hollis says

Spend Matters and CIPS

As businesses try to solve the supply chain problems seen during the coronavirus disruption, the answer actually lies in people and relationships, according to Steve Hollis, a business owner who said supply chain resiliency comes when suppliers share information with one another and see the spend through to the end.

Last week, Hollis was a guest on Spend Friends, a monthly video podcast hosted by Bill Michels, the VP of Operations — Americas at the Chartered Institute of Procurement and Supply (CIPS) USA, and Pierre Mitchell, Spend Matters’ Chief Research Officer. Its goal is to focus on all procurement matters under the sun, like spend management, supply chains and other topics.

Hollis came to the Spend Friends episode with a unique perspective after spending time as a CEO and owner of companies. Hollis has more than 20 years of experience in sales, marketing and manufacturing roles at places like Georgia-Pacific and other companies. His experiences led him to become the co-owner of PPI, a manufacturing company creating sustainable products within the United States. Hollis specializes in creating a collaborative work culture that can sustain high levels of innovation.

At the root of Hollis’s advice for procurement professionals was to remember the unique role that people play in the supply chain.

“People matter,” Hollis said. “It’s more than just a cliche. They matter more than just inside the business. It matters with your supplier people. It matters with your customer people. It certainly matters with communities and stakeholders, even beyond the business. … How do you approach the culture aspect with all of those constituencies inside of it? And ultimately how to create strong business models that have an extended value stream inside of them.”

At the core of the supply chain should be the relationships between and with suppliers, Hollis said. That is where you create real value. Hollis recommended that leaders consider the most strategic, critical supplier relationships to begin. When your suppliers are healthy, that’s when they can help you.

“We like to say, ‘Follow the spend all the way through,’” Hollis said. “When you’re thinking about [cost], you can’t just be inside your own bubble. You have to be thinking about the suppliers. And you have to be thinking about the customers and how to look at that spend all the way through. We learned we were the ones getting squeezed in both directions. The customers were squeezing for cost and the suppliers were squeezing for price up. We were caught in the middle. If we didn’t figure out how to break that constraint, we wouldn’t have survived.”

Hollis used the recent Texas storms and subsequent power outages to explain why relationships are so key in the supply chain. With many current models of how utilities are run, single organizations monitor risk and allocate resources accordingly.

But when Hollis worked in the utility industry, a storm hit at a different point on the map than forecasters expected. Without relying on other suppliers, it could have been completely catastrophic. At the end of the day, it’s about helping customers, which is what information-sharing can accomplish.

“Sharing of information, for us, is critical. But part of it is that there are a lot of inhibitions,” Hollis said. “Bill shared earlier about certain people saying, ‘I’m gonna rip up the contract.’ Well, that doesn’t really promote an environment where folks want to share. … It certainly starts with creating the partnerships.

“Once the partnerships are in place, we believe it has to be an open and collaborative sharing of information. … There’s a famous model in the lean world where you take variation at one point in the supply chain and variation at another point, and you cascade that through the entire value stream. You really find no possible way of succeeding if you don’t start to eliminate that variation. Information-sharing is how we did that.”

Spend Friends will return April 13 for more intriguing procurement discussions! Register here to attend the next live Zoom session. And listen to the fourth episode here.

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