Risks of Short-Term Solutions in Supply Chain Management

𝐓𝐡𝐞 𝐦𝐨𝐬𝐭 𝐞𝐱𝐩𝐞𝐧𝐬𝐢𝐯𝐞 𝐩𝐫𝐨𝐜𝐮𝐫𝐞𝐦𝐞𝐧𝐭 𝐝𝐞𝐜𝐢𝐬𝐢𝐨𝐧𝐬 𝐚𝐫𝐞 𝐨𝐟𝐭𝐞𝐧 𝐭𝐡𝐞 𝐨𝐧𝐞𝐬 𝐭𝐡𝐚𝐭 𝐥𝐨𝐨𝐤𝐞𝐝 𝐜𝐡𝐞𝐚𝐩𝐞𝐬𝐭 𝐰𝐡𝐞𝐧 𝐬𝐢𝐠𝐧𝐞𝐝. Early in my career, I measured success through savings. Clear numbers, immediate impact, easy to justify. Over time, I realised those numbers were often answering the wrong question. What happens when conditions change? I have seen decisions deliver strong savings and still create fragility. Suppliers operating at their limits. Contracts optimised for cost but not for continuity. The negotiation was not the problem. What the decision failed to protect was. Procurement does not operate in stable environments. Supply networks shift, risks surface, and pressure arrives without notice. In that reality, 𝐭𝐡𝐞 𝐯𝐚𝐥𝐮𝐞 𝐨𝐟 𝐚 𝐝𝐞𝐜𝐢𝐬𝐢𝐨𝐧 𝐢𝐬 𝐧𝐨𝐭 𝐰𝐡𝐚𝐭 𝐢𝐭 𝐬𝐚𝐯𝐞𝐬 𝐭𝐨𝐝𝐚𝐲, 𝐛𝐮𝐭 𝐡𝐨𝐰 𝐢𝐭 𝐩𝐞𝐫𝐟𝐨𝐫𝐦𝐬 𝐭𝐨𝐦𝐨𝐫𝐫𝐨𝐰. This is where the role changes. 𝐅𝐫𝐨𝐦 𝐧𝐞𝐠𝐨𝐭𝐢𝐚𝐭𝐢𝐧𝐠 𝐩𝐫𝐢𝐜𝐞 𝐭𝐨 𝐦𝐚𝐧𝐚𝐠𝐢𝐧𝐠 𝐞𝐱𝐩𝐨𝐬𝐮𝐫𝐞. 𝐅𝐫𝐨𝐦 𝐞𝐟𝐟𝐢𝐜𝐢𝐞𝐧𝐜𝐲 𝐭𝐨 𝐜𝐨𝐧𝐭𝐢𝐧𝐮𝐢𝐭𝐲. 𝐅𝐫𝐨𝐦 𝐜𝐨𝐬𝐭 𝐜𝐨𝐧𝐭𝐫𝐨𝐥 𝐭𝐨 𝐝𝐞𝐜𝐢𝐬𝐢𝐨𝐧 𝐚𝐜𝐜𝐨𝐮𝐧𝐭𝐚𝐛𝐢𝐥𝐢𝐭𝐲. I have seen suppliers meet every clause and still leave the business exposed. I have also seen higher-cost decisions protect operations when disruption arrived. Both were compliant. Only one was resilient. Savings without protection create hidden risk. Efficiency without resilience creates future cost. The question I continue to challenge myself with is simple. Are our decisions built for performance, or for survival when conditions shift? “𝐒𝐚𝐯𝐢𝐧𝐠𝐬 𝐬𝐡𝐨𝐰 𝐰𝐡𝐚𝐭 𝐲𝐨𝐮 𝐚𝐜𝐡𝐢𝐞𝐯𝐞𝐝. 𝐏𝐫𝐨𝐭𝐞𝐜𝐭𝐢𝐨𝐧 𝐬𝐡𝐨𝐰𝐬 𝐰𝐡𝐚𝐭 𝐲𝐨𝐮 𝐮𝐧𝐝𝐞𝐫𝐬𝐭𝐨𝐨𝐝.” LinkedIn LinkedIn News #Procurement #Leadership #SupplyChain #RiskManagement #LinkedInNews

𝐑𝐞𝐟𝐥𝐞𝐜𝐭𝐢𝐧𝐠 𝐨𝐧 𝐚𝐥𝐥 𝐭𝐡𝐞 𝐬𝐮𝐩𝐩𝐥𝐢𝐞𝐫𝐬 𝐈’𝐯𝐞 𝐬𝐨𝐮𝐫𝐜𝐞𝐝, 𝐨𝐧𝐞 𝐭𝐡𝐢𝐧𝐠 𝐢𝐬 𝐜𝐥𝐞𝐚𝐫: 𝐩𝐫𝐨𝐜𝐞𝐬𝐬 𝐦𝐚𝐭𝐭𝐞𝐫𝐬. Taking shortcuts can lead to wasted money and a world of headaches downstream. (𝘙𝘢𝘪𝘴𝘦 𝘺𝘰𝘶𝘳 𝘩𝘢𝘯𝘥 𝘪𝘧 𝘺𝘰𝘶'𝘷𝘦 𝘦𝘷𝘦𝘳 𝘣𝘦𝘦𝘯 𝘢𝘴𝘬𝘦𝘥 𝘵𝘰 𝘧𝘢𝘴𝘵-𝘵𝘳𝘢𝘤𝘬 𝘙𝘍𝘗 𝘳𝘦𝘲𝘶𝘪𝘳𝘦𝘮𝘦𝘯𝘵𝘴, 𝘰𝘳 𝘩𝘢𝘥 𝘭𝘦𝘢𝘥𝘦𝘳𝘴 𝘱𝘶𝘴𝘩 𝘧𝘰𝘳 𝘤𝘦𝘳𝘵𝘢𝘪𝘯 𝘴𝘶𝘱𝘱𝘭𝘪𝘦𝘳𝘴, 𝘪𝘨𝘯𝘰𝘳𝘪𝘯𝘨 𝘮𝘢𝘵𝘦𝘳𝘪𝘢𝘭 𝘳𝘪𝘴𝘬𝘴?!) 𝐖𝐡𝐚𝐭 𝐈'𝐯𝐞 𝐥𝐞𝐚𝐫𝐧𝐞𝐝: 💡 𝙁𝙤𝙘𝙪𝙨 𝙛𝙞𝙧𝙨𝙩: Be specific about your needs in RFx docs. If you’re unclear, suppliers will be, too. Before going to RFP, always have quantifiable evaluation criteria finalized and approved by the Spend Owner. 💡 𝙄𝙩’𝙨 𝙣𝙤𝙩 𝙟𝙪𝙨𝙩 𝙥𝙧𝙞𝙘𝙚: The cheapest option often costs the most in the long run. Prioritize value over price. Suppliers who price things materially lower than benchmark norms usually cut corners somewhere to meet margins. 💡 𝘾𝙝𝙚𝙘𝙠 𝙧𝙚𝙛𝙚𝙧𝙚𝙣𝙘𝙚𝙨 𝙩𝙝𝙤𝙧𝙤𝙪𝙜𝙝𝙡𝙮: Source independent references via your network. Past performance tells the real story. Ask the right questions and listen closely to the answers.  💡 𝙏𝙝𝙞𝙣𝙠 𝙖𝙝𝙚𝙖𝙙: Can the supplier grow and evolve with your business? Are they innovative and flexible? Does their company culture and ways of working align with yours?  💡 𝙆𝙣𝙤𝙬 𝙩𝙝𝙚 𝙧𝙞𝙨𝙠𝙨: Most suppliers come with some level of risk, the key is understanding and managing it. Conduct due diligence on short-listed suppliers. Outputs should inform the down-selection process, with material deficiency action items included in the contract. 💡 𝘾𝙝𝙤𝙤𝙨𝙚 𝙥𝙖𝙧𝙩𝙣𝙚𝙧𝙨, 𝙣𝙤𝙩 𝙫𝙚𝙣𝙙𝙤𝙧𝙨: The best suppliers care about your long-term success and aligning with your goals.  Look at proposals holistically, thinking beyond the transaction and into value creation. 𝐇𝐞𝐫𝐞’𝐬 𝐭𝐡𝐞 𝐭𝐡𝐢𝐧𝐠: Looking back, I’ve been at firms in seasons where costs were prioritized over total value, often leading to short-term gains but long-term challenges. There were times I should’ve taken a firmer stance about material supplier risks identified and bias in the selection process.  As procurement peeps, we provide recommendations based on long-term value, risk management, and partnership potential. This includes having the courage to speak up with informed and actionable guidance when things don't pass muster. The goal is to ensure sourcing outcomes build a foundation for success, not just a quick win. 📢 𝙋.𝙎. 𝙒𝙝𝙖𝙩 “𝙨𝙘𝙝𝙤𝙤𝙡 𝙤𝙛 𝙝𝙖𝙧𝙙 𝙠𝙣𝙤𝙘𝙠𝙨” 𝙨𝙤𝙪𝙧𝙘𝙞𝙣𝙜 𝙡𝙚𝙨𝙨𝙤𝙣𝙨 𝙬𝙤𝙪𝙡𝙙 𝙮𝙤𝙪 𝙨𝙝𝙖𝙧𝙚 𝙬𝙞𝙩𝙝 𝙮𝙤𝙪𝙧 𝙮𝙤𝙪𝙣𝙜𝙚𝙧 𝙥𝙧𝙤𝙘𝙪𝙧𝙚𝙢𝙚𝙣𝙩 𝙨𝙚𝙡𝙛?

If you stepped into a CPO, CSCO, or COO role this year, you’re probably locking in cost you won’t be able to unwind by Q3. Right now, most supply chain leaders are carrying pressure from every direction: • Tariffs shifting cost overnight • Energy and input prices still volatile • Supplier constraints tightening • Demand signals moving faster than planning cycles And at the same time: You’re expected to deliver margin, resilience, transformation, and growth. On paper, everything is aligned. In reality? Sourcing, inventory, and execution decisions are being made in parallel across the organization without a shared structure for trade-offs. Last week, in a working session with a Global CSCO in automotive, we mapped this out live against decisions already in motion: • ~$40M+ tariff exposure already flowing through decisions • Input costs rising across critical materials • Margin targets holding at ~34–35% • Multiple transformations running in parallel (ERP, integration, operating model) None of those were the real problem. The risk was how they were converging. If this sounds familiar, you’ll recognize it immediately: • sourcing decisions getting revisited after they were “closed” • inventory building as a hedge, not a strategy • teams aligned in meetings, but pulling in different directions in execution Because when decisions get made like this: • Procurement optimizes for cost • Operations protects service • Finance pushes for both …but no one owns the trade-off cost doesn’t stay flexible. It locks in. Through: • supplier commitments • inventory buffers • short-term fixes that become permanent This is where most organizations start absorbing cost quietly, long before it shows up in the P&L. And by the time it does, it’s already too late to unwind without creating supply disruption. It’s not speed that creates the risk. It’s locking in decisions before the organization has agreed what actually wins when priorities collide. This is where most organizations lose control of Q3,  long before they see it in the numbers. Not from lack of data. Not from lack of effort. But from decisions being made without clear ownership at the point of impact.

𝗜𝗻 𝗰𝗮𝘀𝗲 𝗼𝗳 𝗣𝗿𝗼𝗰𝘂𝗿𝗲𝗺𝗲𝗻𝘁 𝗲𝗺𝗲𝗿𝗴𝗲𝗻𝗰𝗶𝗲𝘀 -> 𝗯𝗿𝗲𝗮𝗸 𝘁𝗵𝗲 𝗴𝗹𝗮𝘀𝘀 and grab your emergency toolkit, setup a SWAT team, get on it asap and swoop, swoop the mess. But wait? Do we need to resolve emergencies creating additional mess on top? Reactive solutions do not just simply clean-up, they may lead to additional mess. Looking at Procurement, this could lead to: ▪️Remediating a supplier failure with a new unvetted supplier ▪️Maverick spend with no consequence perpetuating non-compliance ▪️Retrospectively accepting contract terms creating further risk exposure 𝗖𝗹𝗲𝗮𝗻𝗶𝗻𝗴 𝘂𝗽 𝘁𝗵𝗲 𝗺𝗲𝘀𝘀 𝘄𝗶𝘁𝗵𝗼𝘂𝘁 𝗮 𝗽𝗹𝗮𝗻 𝗺𝗮𝘆 𝗰𝗿𝗲𝗮𝘁𝗲 𝗳𝘂𝗿𝘁𝗵𝗲𝗿 𝗺𝗲𝘀𝘀 𝗮𝗵𝗲𝗮𝗱. Each time you have to resort to firefighting or short-term remediation without looking into preventive measures, there is a risk to worsen the situation and creating a reference for others to follow. So what should you do instead when emergency arises? 👉Address immediate solutions but ensure that preventive measures are determined, tracked and effectively implemented. ▪️𝗗𝗶𝗴𝗶𝘁𝗮𝗹 𝗣𝗿𝗼𝗰𝘂𝗿𝗲𝗺𝗲𝗻𝘁 𝘁𝗼𝗼𝗹𝘀 to automate processes & reduce manual errors. ▪️𝗦𝘂𝗽𝗽𝗹𝗶𝗲𝗿 𝗿𝗶𝘀𝗸 & 𝗽𝗲𝗿𝗳𝗼𝗿𝗺𝗮𝗻𝗰𝗲 assessments ensuring reliability of supply ▪️𝗘𝗻𝗳𝗼𝗿𝗰𝗶𝗻𝗴 𝗖𝗔𝗣𝗔 - corrective & preventive measures as part of remediation ▪️𝗙𝗼𝘀𝘁𝗲𝗿𝗶𝗻𝗴 𝗮 𝗰𝗼𝗻𝘁𝗶𝗻𝘂𝗼𝘂𝘀 𝗶𝗺𝗽𝗿𝗼𝘃𝗲𝗺𝗲𝗻𝘁 𝗺𝗶𝗻𝗱𝘀𝗲𝘁 to reduce emergencies Not all emergencies can be tackled without additional sweeping but we shouldn't be careless. Good processes, automation and a quality-mindset can help a long way.  ❓What's your thoughts on this.  ❓How can we reduce emergencies and prevent further mess.