For Companies, A Personal Relationship with the Supply Chain Absolutely Matters

We constantly hear how a bevy of tactics, from third-party audits to harnessing the latest in technology to even artificial intelligence can make supply chains less wasteful, more efficient and most importantly – far more humane.

A survey completed last fall by a leading middle-market and supply chain research intuition concluded that suppliers that maintain strong and trustworthy personal relationships with their customers often grow at a faster rate than those reporting weaker ties to their clients.

The same could be said as to how larger companies reach out to their suppliers – a concept that is hardly new. Earlier this century, a North Carolina State University research project, amongst several conclusions, implored companies to not assume technology systems can take the place of - or make it easier to develop – personal relationships.

“Supply chain management by its very nature depends on relationships and connections,” opined Supply Chain Quarterly in its review of a recently published book. The authors of  Fundamentals of Supply Chain Management: An Essential Guide for the 21st Century posit the very term “supply chain management” is not possible without meaningful relationships between vendors and customers. Another supply chain group, United Kingdom-based Chartered Institute of Procurement & Supply (CIPS), has also admonished companies to avoid “overly formal” relationships with their suppliers and to ensure clear communication channels in order to ensure transparency.

The question, however, is an obvious one: is this even possible when those suppliers are often halfway around the world? What is clear is that at a time when companies say they want an a more inclusive supply chain while reducing poverty worldwide (often in the quest to align with the United Nations Sustainable Development Goals, or SDGs), personal relationships are more important than ever.

Across any industry, this trifecta of building trust, offering assistance and repeated follow up is working out well for two companies in vastly different industries.

One company that says it has grasped the link between responsible sourcing and personal relationships is the natural personal care products company Burt’s Bees (which is owned by Clorox). The company depends on raw materials such as beeswax, coconut oil and shea butter for products ranging from lip balm to body wash. Sourcing from remote areas far away, of course, is not always the easiest task for a procurement team. To that end, one of Burt’s Bees responsible sourcing professionals, Shannon Hess, has explained how asking suppliers the right questions is a start if a company is committed to responsible sourcing – from inquiring how suppliers go about their daily lives on and off the farm, to whether they have access to the resources they need to produce these ingredients reliably in the first place.

“We’ve invested in these types of personal relationships that make up our supply chain, and they have paid off,” said Hess in another post. “They are part of our commitment to good growth — growth that is profitable, sustainable and responsible.”

The relationships Burt’s Bees strives to build with suppliers in regions such as east Africa can be strengthened by programs including trainings designed to help farmers or growers’ cooperatives improve their yields. As these suppliers watch their businesses become more successful, trust becomes cemented between the farmers and growers and Burt’s Bees buyers. When an unexpected disruption such as severe weather or a pest infestation occurs, Burt’s Bees procurement staff can respond quickly, as they understand the lay of the land and can address the problem almost as soon as it flares up. Hence Burt’s Bees has turned the idea of risk management on its head, allowing the company to be far more proactive than reactive - and meanwhile can make adjustments across its supply chain before it becomes far too late.

Another company that insists it has long humanized its supply chain is G Adventures, the Toronto-based global tour operator. G Adventures has long been able to provide travelers what it views as a more authentic and local travel experience by having local boots on the ground to gauge whether local sustainable business opportunities can help enhance its guests’ tours. The company long ago groomed a close partnership with an NGO, Planeterra, which identifies social enterprise opportunities aligned with G Adventures’ mission.

Planeterra’s projects are designed to build economic opportunities in the very places where G Adventures’ tours pass through. The NGO’s work in Hoi An, Vietnam with another nonprofit, STREETS International, helps provide 30 students a year score training and experience in hospitality and tourism. The result is Oodles of Noodles, a restaurant and social enterprise that hosts approximately 12,000 G Adventures travelers annually. In addition to securing work at the restaurant, students are also provided safe housing and health insurance along with the support they need to help them complete the program.

Over 2,600 miles away in Kathmandu, Nepal, another social impact project helps take young women and girls off the streets – addressing human rights abuses while providing secure jobs. Planeterra’s work with the local nonprofit SASANE led to the creation of the Sisterhood of Survivors. The program fights human trafficking by training survivors as paralegals, who in turn become the first point of contact for other victimized women through placements in police stations across the Kathmandu area. SASANE also has an outreach program in rural villages. Some of the women survivors identified by the nonprofit in those villages now have jobs teaching G Adventures’ travelers how to make traditional local foods – and those revenues help provide SASANE with a revenue stream for their programs while offering meaningful work in tourism for these survivors.

The lessons learned by Burt’s Bees and G Adventures are applicable to any company that says it is determined to have a more sustainable supply chain. But the key is investment: as in investment in time spent understanding your suppliers; investment in feet on the ground and ears ready to listen; and investment in staff, resources and funds that can help suppliers thrive for the long term.

Image credit: SASANE/Facebook