How Transparency Can Ease Pressure on the Global Supply Chain
In a challenging time, Elo opens lines of communications with its customers
Nathan Swisshelm, Elo’s Senior Director of Global Supply Chain, doesn’t just tell people what they want to hear. He insists that the company be completely transparent with its partners up and down the supply chain, and this approach has paid off in ways that even he didn’t expect.
Luke Wilwerding, Senior Director of North America Sales at Elo, sat down with Swisshelm to discuss the lessons the company has learned over the past year, how they’re improving relationships with customers, and what they mean for the future.
LW: You talk about operating under a “pandemic playbook.” What does that mean?
NS: In normal business cycles, you’re either ramping up as fast as you can because the economy is growing or you’re slowing down as fast as you can because the economy is tightening. But in 2020, you had both. Certain customers were taking a pause, but others were absolutely exploding with business.
LW: We saw some customers actually growing in 2020. How did that impact your team?
NS: We had to flex our supply chain to meet the sudden demand from healthcare customers. Hospitality basically screeched to a halt, while healthcare came out of nowhere with enormous demand in orders to meet the needs of the pandemic. But outside of healthcare and a few other areas, we weren’t seeing significant growth signals. To be honest, our supply chain was contracting. Things were very tight in July, August, and September of 2020.
It was probably around October when my team started flagging some concerns at a global sales meeting. We were saying, “Hey guys, we’re a little worried. It seems like we could be seeing signs of a recovery here. If that happens, we’re going to be in trouble because we’ve been contracting through the middle part of 2020.”
LW: What’s keeping you and your team up at night?
NS: We started to hear about some potential shortages, so we worked to solidify our forecast on some critical materials. And we worked with suppliers to place orders farther out in anticipation that the lead times would increase for those materials.
LW: What kinds of materials?
NS: I'm sure you’re familiar with everything that's going on with integrated circuits. You see GM and Ford shuttering factories because they can’t get ICs. We're fighting for ICs, too. To do that, we looked back up the supply chain at our suppliers and manufacturers. But over the last several months we’ve also been focusing in the other direction with our sales team, our distribution partners, and even our critical enterprise customers. We’ve advised them in the same way we’ve communicated with our suppliers, which is to look a little bit farther out into the future, anticipate what they need, and give us firm forecasts.
All of a sudden supply-chain teams have gone from quietly working in the background to being somebody everyone wants to talk to. Now days we get pulled into a lot of these conversations with enterprise customers. We’ve told them, “We’re seeing a surge in demand. It’s impacting output. It’s straining manufacturing and logistics. And it’s limiting our ability to give you real firm order confirmations right now.” We gave them some ugly lead times. But we felt like it was the right thing to do. We said to our partners, “Hey guys, this is what we’re seeing right now. So if you can plan accordingly, we’re all going to be a lot better off.”
LW: That probably felt risky, especially if the rest of the industry isn’t doing the same.
NS: There are some competitors telling customers anything they want to hear to get that order. It’s been a little frustrating because we’ve stuck to our ethics. It’s kind of tough when somebody else will say, “We can get it faster than that.” Well, maybe, maybe not. What we’ve done is try to be very transparent with customers. Our hope is that they're going to take that information and plan projects to longer lead times and help us all get through this.
LW: And what was the reaction?
The risk of being transparent is actually paying off. We are seeing our partners and our end customers taking action. We are starting to see our order placement extend out into 2022. That gives my team the horizon to go out and solve this and gives us visibility into what those customers are going to need. So yes, I would say that it has absolutely been effective and positions our customers for growth going forward.
LW: One last question: Are you feeling that there’s optimism about the economy in general?
NS: It feels like there’s a lot of pent-up demand. We’re seeing good signals from all of our key enterprise customers. Our small business end users are very optimistic. Our team is working to position inventory with a focus on future growth where we think everything’s going. It’s really exciting to see our customers and partners bouncing back as quickly as they are.