The Supply Web
Sam Watling examines how secondary school biology teaching can relate to the business world.
It is often said that one learns from experience. My previous article commented on the temporary work that I have been employed in over these last few weeks. Before this job I have worked in a number of other medium/large companies and with every further job I have taken I have gained further insight into some of the bureaucracy and workings of these firms.
It was my last position, however, that led me to liken the relationship of companies with their suppliers as a 'web'. In secondary school most children learn of the relationships between various food sources in a 'food web', and that a modification in the numbers of organisms at certain 'levels' in the web will have an effect on most other levels of the web - for example, the number of organisms left for other creatures to eat or the survival of certain 'lower' organisms.
In a similar way, businesses have a 'supplier web' relationship. Removing a 'supplier' from one level of the supply chain will give a large firm (the 'Big Cheese') a smaller choice of suppliers ('Small Fries') which it can use - it will decrease the competition for businesses at the Small Fry stage of the chain but also inevitably increase pressure on those businesses' suppliers ('Individual Specialists') to cope with the new demand.
One of the key influences on whether the Individual Specialists are able to cope with any decisions from the Big Cheese is the amount of information they are given by their nearest Small Fry in the supply web. One case study observed recently showed a national Big Cheese making the decision to run a promotion on one of the products made by an Individual Specialist, a small (family run) business. The orders flooded in with the Big Cheese, their closest Small Fry being made aware of the promotion yet failing to inform their supplier of the forecasted demand increase. Thus, the orders from the Big Cheese fell behind as the Individual Specialist eventually could not cope with the demand and folded as a result. Hundreds of orders went unfulfilled with customers of the Big Cheese whilst the Small Fry desperately attempted to establish contact with a number of other Individual Specialists to complete the work to fulfil the orders. The relationship with the Big Cheese and the Small Fry was naturally damaged as well as the relationship of the Big Cheese with its customers.
And the lesson from this example - no matter how many levels there are in a business supply chain, if the Individual Specialists are not made aware of changes at higher levels, they will have no power to affect decisions that influence the way their business and those 'above' it in the web function. It all boils down to the 'Big C', Communication. If an (information) system can be put in place to allow all companies in a 'branch' of the web to communicate effectively, satisfactory relationships can be maintained amongst all businesses and their closest customer in the web.
Ultimately, if you don't look after your own small fries, you end up with a pitiful bag of chips.