The mature supply chain: Shifting from WIIFM to WIIFU
By shifting focus from individual wins to mutual success, organisations can build stronger supplier relationships, drive sustainable value, and navigate Supply Chain complexities more effectively.
When you start bringing the external perspective into your Supply Chain collaboration process, you’re taking a very important step towards achieving a true ecosystem of profitable value creation.
We’re talking about the full realisation of Supply Chain maturity – a data-driven nirvana where data flows freely from my suppliers and their suppliers; to my customers and their customers. Unique business opportunities seem to arise almost without effort, and everybody in the network is reaping the rewards.
Of course, not every company needs (or wants) to achieve that perfect nirvana of Supply Chain maturity. However, if you’ve lined all your internal ducks up and have a fully functional integrated business planning (IBP) process that seems to be working smoothly, it is time to focus on the external.
Moving to Stage Four maturity, perhaps by adopting some of the principles of the Japanese concept of keiretsu, is a solid start – but what does that look like in practice?
There are three high-level steps to improving your external partner collaboration: building a balanced team, shifting mindset and spreading your new attitude to your partners. Let’s take a look at each of these now.
Step one: Build a balanced team to manage external partners
Yes, we said “team”.
Gone are the days of individual relationship management, when the commercial or procurement team would lead the discussions with your upstream stakeholders (your suppliers and your suppliers’ suppliers); and the sales team would own the relationship with those downstream (your customers and their customers).
Whether you’re trying to achieve greater Supply Chain maturity or even building your own version of a keiretsu, a more collaborative approach to managing your relationships with external suppliers will always deliver better outcomes. When dealing with your suppliers, for instance, your Commercial Director will be able to sense-check financial viability, but that must be balanced with your Supply Chain Director’s unique perspective on factors that may not be on Finance’s radar.
Two great examples of this are minimum order quantities (MOQs) and ability to deliver in full and on time (DIFOT). There’s no point negotiating a great price for Widget A if the supplier can’t deliver them to you in the quantities you require, in the time frame you need them.
Step two: Shift your internal mindset from WIIFM to WIIFU
In a business context it may almost seem counterintuitive to move from what’s in it for me (WIIFM) to what’s in it for us (WIIFU)” when dealing with external partners. After all, isn’t the point of most commercial operations to be successful, typically by maximising your profits and returns to shareholders?
The short answer is yes, of course the traditional financial metrics are critically important. However, when a “success at all costs” mindset is ingrained in your culture, there’s a very real risk of this translating into an overarching attitude of “when I win, you lose” in your dealings with external partners. And that can cause longer-term pain.
For example, you may be able to save some costs by haggling with a key supplier on Widget A. What if that process damages the relationship to the point of it becoming unsustainable at their end, and they’re no longer willing to supply you with Widget B, which you can’t get from anyone else?
This can be managed by encouraging a subtle mindset shift in the team involved in managing external partners: from WIIFM to WIIFU. It’s the heart of truly strategic supplier performance management, where continuous improvement is a joint process, requiring both parties to consider changes to practices to the benefit of both.
Essentially, it’s a shift from prioritising individual gain and wins, to negotiating strategic advantages and shared value.
Step three: Spread your new approach far and wide
Once your internal team has been established and you’ve agreed on a WIIFU approach, it’s time to spread the keiretsu-style love with your external partners. In the spirit of transparency and collaboration, you may like to establish upfront that you’ve adopted a new approach to supplier management and are focused on win-win outcomes.
Let’s say you have three suppliers who are able to supply Widget A, however you’ve been experiencing issues with your preferred supplier.
Under the new approach, your strategy might focus on the other two suppliers, exploring various scenarios you’ve modelled in your IBP process around volume, pricing, scheduling and other factors to find the best fit for your new preferred supplier – or to put your existing supplier on notice to improve. This process can effectively be aligned with your regular budget review process.
Sometimes the best question to start with can be something as simple as “I’ve got $X to spend on widgets this year, how can you help me use it more effectively?”
The benefits of external collaboration
When you start integrating the external perspective into your Supply Chain collaboration process, the benefits can be remarkable. As well as helping to meet procurement budget targets, there will also be numerous opportunities for incremental savings with your partners and suppliers, reduced supply risk due to factors such as MOQs and DIFOT being properly considered in relationship negotiations, and greater flexibility across the supplier base. For procurement teams, it can also help meet budgeting objectives.
Given the emerging focus on sustainability reporting and disclosure across Supply Chain operations, you’ll also unlock the ability to assess and negotiate with your suppliers on the basis of ESG considerations such as carbon footprint and modern slavery risks.
All things considered, the message is clear: collaborate with your external partners strategically to unlock shared success and value.
We are enablers of change and transformation in Supply Chain, Information Management, Financial Planning & Analytics, Management Consulting, Project Management, and Managed Application Services. Contact us to find out more about how we work with your teams or call 1300 841 048.
