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What do you do if your supplier's capabilities change unexpectedly?

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Navigating unexpected changes in your supplier's capabilities can be a daunting challenge. You've built your production schedules, product development, and market strategies around their promised deliverables. But what happens when they can no longer meet those expectations? Whether due to resource shortages, financial difficulties, or operational shifts, a supplier's change in capabilities can significantly impact your business. The key is to act swiftly and strategically to mitigate risks and ensure that your supply chain remains robust and responsive to such changes.

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Debbie Farley (MCIPS)

Senior Strategic Procurement at Racal Acoustics
INI ETUK

POB COORDINATOR-Technip Energies Middle East Project International, GTA FPSO TORTURE

1 Assess Impact

When a supplier's capabilities shift, your first move is to determine the extent of the impact on your operations. Review your contracts and inventory levels to understand your immediate exposure. Consider how the change affects your production timelines, product quality, and customer commitments. It's essential to quantify the potential disruptions in order to prioritize your responses and communicate effectively with stakeholders. This assessment will form the foundation of your action plan, guiding you through the subsequent steps necessary to address the changes.

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INI ETUK

POB COORDINATOR-Technip Energies Middle East Project International, GTA FPSO TORTURE
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Whenever a supplier capabilities is shifted , first move to determine the extent of the impact on the operations. Depending on the circumstances , implement your crisis plan , communicate positively and proactively with stakeholders and including customers. Analyze the situation with risk horizons using all the available informations.

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Lambo Zou

4K Followers - Furniture Hardware Expert | Smart Home Systems | Niche Product Development | Advanced Manufacturing | Material Science | Sourcing Specialist
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If your supplier's capabilities change unexpectedly, first, assess the impact on your supply chain and product delivery timelines. Communicate promptly with the supplier to understand the scope and reasons behind the changes. Explore whether they can provide alternative solutions or recommendations. If the changes significantly affect your operations, start looking for alternative suppliers who can meet your requirements. Additionally, review your contract for clauses related to capability changes and seek legal advice if necessary. Use this opportunity to update your risk management plan, incorporating strategies for dealing with similar situations in the future.

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2 Communicate Early

Once you've assessed the situation, initiate communication with your supplier. Understand the reasons behind their changed capabilities and discuss any potential for recovery or workaround solutions they might offer. Transparency is crucial, so also inform your team and customers about possible delays or changes as soon as possible. Maintaining open lines of communication helps manage expectations and builds trust, even in challenging circumstances. It also opens the door for collaborative problem-solving which could lead to innovative solutions.

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Debbie Farley (MCIPS)

Senior Strategic Procurement at Racal Acoustics
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Discussion is key here as it could be something easily solved with collaboration. For example, if the change is going to be a temporary hurdle, can more stock be ordered before the capabilities change to see the organisation through this period to limit business impact? Or, if it's a permanent change is the supplier able to suggest any other options that could be explored. For example; if they are no longer making a certain type of product, can they suggest other credible companies that could help with your situation?

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3 Explore Alternatives

With a clear understanding of the impact and open communication channels, begin exploring alternative suppliers or solutions. This might involve sourcing from different companies, considering substitute materials, or adjusting your product specifications to accommodate new capabilities. The goal is to maintain continuity in your supply chain without compromising on quality or cost-effectiveness. It's also a good opportunity to review your supplier diversification strategy to prevent similar issues in the future.

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4 Adjust Operations

Changes in supplier capabilities may require you to adjust your internal operations. This could mean altering production schedules, reallocating resources, or even redesigning products. It's important to be flexible and responsive, making operational decisions that align with your revised supply chain strategy. Work closely with your team to implement these changes efficiently, ensuring that everyone understands the new processes and objectives.

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5 Risk Management

Implementing a robust risk management plan is vital to prepare for any future supplier capability changes. This involves regularly reviewing supplier performance, maintaining a diverse supplier base, and developing contingency plans. By proactively managing risks, you can minimize the impact of supplier changes on your business. It's about being prepared for the unexpected and having the agility to adapt when necessary.

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6 Build Relationships

Finally, focus on building strong relationships with your suppliers. A partnership based on mutual understanding and collaboration can lead to more stable supply chains. Regularly engage with your suppliers to discuss performance, improvement opportunities, and future plans. Strong relationships can also lead to better communication and more effective problem-solving when issues arise, ensuring that both parties are working towards common goals.

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7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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Kevin Brisebois

CEO at Zefinity | Product Innovation, Design, Manufacturing & Supply Chain Solutions
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From my experience it is not often that a supplier's actual capabilities change however; I have seen several situations where supplier's claim to have capabilities which they don't. This is a situation I am helping a client navigate real-time. If a supplier has overstated their capabilities or their "actual capabilities" have changed the most important part is understanding the impact on your project/business. If this supplier can no longer achieve what they have claimed previously my recommendation is start qualifying an alternative supplier ASAP. Note: This is also why I highly recommend asking for concrete case studies or projects where a vendor can display their experience rather than rely on their word alone.

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What do you do if your supplier's capabilities change unexpectedly?

1

2

3

4

5

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1 Assess Impact

2 Communicate Early

3 Explore Alternatives

4 Adjust Operations

5 Risk Management

6 Build Relationships

7 Here’s what else to consider

Supplier Sourcing

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What do you do if your supplier's capabilities change unexpectedly?

1

2

3

4

5

6

7

1 Assess Impact

2 Communicate Early

3 Explore Alternatives

4 Adjust Operations

5 Risk Management

6 Build Relationships

7 Here’s what else to consider

Supplier Sourcing

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