In this episode we’ll be talking about:
- How covid was a blessing in disguise for Supply Chain & Procurement Teams.
- The importance of having a mentor in your career.
- How Supplier Development can be leveraged to improve Supplier Performance.
- How the Enhanced Supplier Development Framework works.
- Reactive vs Strategic Supplier Development.
Here's the interview:
Today, we have the pleasure of hosting the Supply Chain Maven, PhD, Speaker, Educator, Blogger Vlogger, hosts of the Supply Chain Show and founder and CEO of Supply Chain Management Dojo, Dr. Muddassir Ahmed. Welcome to the show!
Hello, hello! Thank you for having me Sam, Richard and the team. I think you've been doing a great job here and I must say you are the first person who has pronounced the company name correctly and my name also correctly at the same time. So well done you.
Thank you very much. Now I have to start with the question here. How in the heck do you have the time?
Time for the podcast?
That's a good question. People ask me this. I do blogging. I have a full-time business, team management, vlogging and all that.
It’s all about productivity. And I think the productivity is more about what you don't do than what do you do. And I'm very picky on what I don't do. Actually, I have little shorts or YouTube shorts as we call it these days on this.
Five things I actually don't do. I don't play video games at all. I've got no interest in that. I don't watch TV at all. Maybe watch Netflix or a movie maybe once in a while just to keep keep my misses happy. And then I basically don't watch politics at all. I Have zero trust in politics. I don't I don't do that. And actually I say more no, than I say yes to things as well, so that that also helps.
And I read a lot, but reading a lot or listening to knowledgeable content helped me being productive.
Very cool. And then we're very happy of course, that even though you're selective, you said yes to, to being on today's episode of The Way We Source.
I have to ask you, what exactly does sourcing and procurement mean to you?
See there is a bill, it was purchasing and then it moved to procurement in the more strategic nature of the things. And now sourcing. So sourcing is out and out a strategic function, right? Where you can go in and you have to find these strategic suppliers or strategic partners. I wouldn't use the suppliers.It just doesn't sound right. Strategic partners which can add value to your business, add value to your services, help you grow. So this is how I see the real value proposition.
I worked for a corporate business 16, 17 years. I worked for two very big brands, and the way I see the role of operating, procurement and sourcing: Cutting the cost out.
This mindset they have, like the biggest KPI they have is cost reduction or cost outs as we call it or savings in some companies, I think is detrimental to the overarching goal of value proposition of sourcing. Because there's only so much you can focus on cost. We should be focusing on how procurement and sourcing create value.
And how they define value by finding the right partners. And in terms of doing the innovation, creating new areas, launching product faster.
I love to give you a quick story just to prove my point there. We’re talking about a high-end brand here, I think about decade ago. Maybe not true right now. So apologies for not having a recent story.
The sourcing people said: the Chinese players are coming in. They can lower the price, but we don't wanna dilute our brand. Let's go and source from China. So the sourcing guys has been given this task to go and find a supplier in China, and guess what? They actually find a very good supplier in China, create a good product and brought the product price down 45%.
But the thing is then the whole sourcing department almost totally forgot that if you're making products in-house or in Eastern Europe, the lead time is shorter. If you use suppliers in China the lead time goes up four months.
So what is the complication of longer lead-times? That means you have to have a longer forecasting, which we are not good at. You have to have a more inventory, which we are not planned at. So it ended up being a disastrous project because we end up having inventory which we don't need and hardly sell any.
So, did we follow the purpose of procurement? Not fairly. It was just cost focused, which did not create a value for the project itself.
And of course, if cost is the key indicator, then it's gonna be hard to create more holistic value for the organization.
And that's a great story to be able to highlight that as well, why it's so important to take those things into consideration holistically. We wanna cover that topic as well as I know that you're passionate about supplier collaboration about supplier development.
But first, for some of those that don't know I was gonna ask you to please give a little bit of background about Supply Chain Management Dojo and what you guys do?
Actually, I finished my PhD and I start doing blogging. And the reason I started a blog, I realized that the supply chain content was pretty weak.
What is MRP? What does a MRP do? MRP was invented in 1956. God forbid, just leave that part alone. Tell me something more interesting.
You talk about sourcing and content writers say: these are the seven stages of sourcing. You can Google it, you can find it.
But can somebody share, what are the best practices? How you as experienced people have used those seven steps to drive the value?
I started like in 2015. I started writing blogs like using my experience: 18 ways how to introduce inventory, seven strategies on how to improve your forecasting, eight ways on how you measure your inventory KPIs etc. This is very much how digital marketing people write list blogs and how-to blogs.
So run about the blogging and then I learned about SEO and digital marketing a bit, and I just figured out, even though I had no qualification, I never really actually read a book on marketing in my life. I figured out the art of SEO and how to rank on YouTube. So that worked out pretty well.
And regarding my blog SCM Dojo: we are in the top-10 websites globally. We get 50,000 visitors monthly. We've got 32,000 email subscribers and a very vibrant community. I've got I think 67,000 followers just on LinkedIn and 25,000 on Facebook.
So my job was pretty good. I was head of planning and operations for Bridgestone. Covid hit and covid almost like the biggest blessing a supply chain community can ever have It has somehow taken us from an administrative task to a strategy level problem where the money was pouring in by VC’s and all CEOs now talking about digitalization, digital transformation, driving internal efficiencies, more customer intimacy, customer-centric supply chain.
And those were the topics I was already writing or talking about for some time. So I was just maybe two, three years ahead of time for the rest of the world, and then people started contacting me. Can you advise us?
And I couldn’t do it myself. So I said: the best way to get all this knowledge and content to hundreds, thousands of people is by digitalization. And that’s what I did. And I'm not alone. I have a lot of experts. So we created SCM Dojo.
Dojo is a Japanese word, which means place to stay and meditate. And that's where the brand come from. Our main vision and aim is to help supply chain people survive. So we are not the hero, the suppliers and people are the heros. We are here as your guide, as your mentor.
So whatever shoes you have, we have knowledge content, we have expert courses, we have the best practices. So if you want to know how to implement automation, we got the tool. You need a best supply chain KPI, we got the tool. If you want to know how to improve your warehouse, we got the tool.
So you think about the process, you think about the problem, you're gonna come to us, we are gonna find you an expert. We are gonna find you a tool. We are gonna find you best practice, and we are gonna find you a course.
Transitioning a bit, you said that you've been a practitioner and I looked through a bit of your LinkedIn page before our sitting and did a bit of my homework.
15+ years of various companies like Volvo Cars, Eaton, Bridgestone and alike. What's one thing that you know now today that you wish that you knew when you started your career in purchasing?
Great question mate. Absolutely. Great question. So if you see in, we are very much focusing on mentoring. So all our members who are paying us money, or even not paying us money, part of our community, newsletter, connected to us, will get mentoring from us. And this is our way of giving back.
I’ve worked for British and American corporations – and bosses are bosses, right? They're supposed to delegate to you, if you are super lucky, then you're gonna find a boss who actually acts as a mentor. Not just a ”delegator and get shit done kind of boss”. In supply Chain, unfortunately, most of the bosses are: ”I told you to do so, go and go do it”. One out of ten bosses are actually mentors and I was lucky enough to find one.
I had seven, eight bosses and there was a clear difference who was the boss and who was a mentor/boss. Because you can learn up from your boss who's a mentor, you can look up to him or her. You can learn leadership strategies, technical strategies and so on so forth.
And most people wants to approve in their career, right? They want to grow, they want to go for higher positions, apply for a managerial jobs, they want to apply for a leadership job, they want to make more money. And absolutely everyone should strive to do that. If you have some ambition in your life.
The difference is the lack of mentoring. The knowledge is there, there's resources there, but mentoring is very intangible stuff. I've made some mistakes in my career. If somebody could have mentored me, I could have cut that lead-time to get to a director or manager role by two years easily.
Because I learned from a mistake, rather than somebody telling me. Let me give you simple example. To become a manager, you've got to delegate, but nobody actually teaches you how to delegate. But if I'm mentoring somebody else, there is the four steps of delegation.
You define the task, you identify the person you want to delegate, you define what you want to delegate, ask the person: do you understand what I'm asking?
And that's the difference. So if I had a mentor like we are providing right now, it would have made a huge difference. And right now we are trying to make a huge difference in people lives in cutting that lead-time of growth.
I think that finding a mentor is so important. It's such a good thing to highlight as well. And those four tips to delegate spoken like a true once procurement professional turned into expert marketer. So I love that as well.
Supplier Development Framework:
I have to ask you about the topic that of course is the one that we're really excited to talk to you about today and a topic that obviously excites you. I look through and you've published your doctorate thesis on the topic itself titled Enhanced Supplier Development Framework, a systematic Approach to improve supplier performance.
How exactly can supplier development be leveraged to improve supplier performance?
Again a great question. Let's go down to the very basics of procurement. So procurement is essentially having a supplier relationship to find a product or a service at a best possible cost at the best possible quality. At the best possible delivery lead time.
I'm making it super simple so everybody understand.
And then that you make your complicated contracts: Service level contract, quality contracts, inspection contracts, whatever. Which is all good by the way. You can add innovation in there, you can add management structure in there.
The theory is linked with my whole mentoring mantra.
Before the birth of SRM. Which you guys are very good at doing this. It was this idea of: Okay we have 10 suppliers and we can let them compete with each other, find the best one and the one who's not performing - beat the crap outta them.
This whole historical thing of the buyer pointing their finger saying: ”I'm the boss. I'm the customer”. That has gone away.
SRM has proven that Supplier Relationship Management is a body of knowledge where you talk about commercial collaboration, you talk about projects, you talk about innovation, you talk about sharing data.
But this is where the supplier development kicks in. So my theory or my research said the famous Kraljic metrics. The strategic supplier, non-critical suppliers, leverage, bottleneck – we all know this. And we know that there's no point investing time on the non-strategic supplier.
But for the strategic and the maintained supplier level, we want to develop them somehow. And there’s two ways to develop them: One is a reactive way and the other is a strategic way. The reactive way mainly is that you create KPIs for them, you monitor the KPIs and you tell them if their not hitting the KPIs: Your delivery is late, or your lead-time is still longer, your quality is poor. And then you basically have a quarterly reviews with them and then basically say: go and improve it. That is still very reactive way of dealing with the supplier, but it works.
Then we move to the supplier. So for example, you are an automotive or electronics manufacturer. Electronic manufacturing is a very specialized manufacturing. For example, you can't go with 20 suppliers. You have to do with a few supplies, and there are very few suppliers who are very good at it. Automotive has the same issues as electrical manufacturing, oil and gas as well.
But you can't have this adversarial, reactive supplier development relationship. You have to build partnerships.
What do you mean by that? So if you wanna reduce cost or lead-time, and your team are very good in lean manufacturing and value stream mapping. You can go and offer:
We want to work with you as our strategic partner, our experts on lean are gonna come in and we are gonna do a value stream mapping at your place. We are gonna look into your manufacturing processes, and we are gonna identify what waste you have. And if we can end up saving you money. Which we can because we are good at it. That means you're gonna give us some cost outs. That is strategic supplier development.
But in the research, there's a counter argument for that. Most of the first-tier suppliers or even second-tier suppliers who's serving into any specific industry, they supply to competition as well.
So if I'm working for Eaton, the same supplier is also supplying to Schneider. If you are improving your supplier, that means you are somehow benefiting your competition at the same time.
But then you can say ”that's fine. I want to help the supplier”. That means you build a relationship with the customer. Which means the supplier is gonna like you enough, that they are willing to give you something more, something extra. And this is where you build real and better relationships where you help each other.
Similarly we launched this program to test our three ideas program, which is every supplier needs to come up with at least two-three innovative ideas. Because all the suppliers are also innovative. They're not just making bits. They might have few ideas. Maybe an idea of a product that can be fed into our R&D-pipeline or maybe our engineering team can come work together to become more collaborative and improve.
So the point is there's a clear pathway between a reactive supplier development and strategic supplier development.
That is my theory and I developed a framework for that. And I like to think most of the people who are using SRM or supplier relationship framework should be very well versed on those theories.
And the fact maybe is also that there isn't a correct approach, but a correct fit for the type of supplier?
Yes, one size doesn't fit all. As we know, you have to pick from the toolkit, the sets of tools you have. So there is a set of tools available and there’s techniques.
Like people talk about continuous improvement, for example. So the thing with continuous improvement is there is not one technique, there are several. And the same goes with the supplier development.
Fantastic points, Dr. Muddassir. And I think that we could talk to you about this particular topic a lot longer. Unfortunately, we're rounding out on today's episode, and I wanted to get in the last element, which is the quickfire round of today's session.
Nothing about procurement sourcing really at all. It's a few quick questions that we wanted to ask you. One or two word answers that you're able to then just give us quickly off the top of your head.
If you're choosing a car for comfort or a car for fun - which one are you choosing?
Car for comfort, it has to be either Lexus or Infinity Q70.
And if you could dream your wildest dreams, a car for fun.
I'm gonna drive a small, crazy electric car.
Nice. If you could recommend one book, what would it be?
The one I'm recently reading and finish. It's called ”Building a StoryBrand”.
Or I think before that ”Hard things about hard things” by Ben Horowitz. Every business person should read that.
And there's a question that we've been asking a lot of our guests a Swedish term that's called “paradrätt”. It's your go-to meal when you’re having someone over for dinner. What are you making me?
Oh, you are asking the wrong person. I'm not really a foodie. I'm not good in food. I will just take the easiest possible option or I'll just make your noodle.
Oh, fantastic. Noodles are good.
I just wanna say a few things about Kodiak and you guys, I think I have been contacted by a lot of companies and I've done podcasts that has been issued recently.
And I must say what you guys doing in the space is pretty cutting edge. I would recommend everybody to go and have a look what you guys doing, and I think this was one of the best podcast I have ever done. So thank you very much and I'm gonna actually steal your idea of these quickfire questions and I'll include that in my supply chain show.
Thank you so much Muddassir!
If you wanna learn more go and follow him on LinkedIn. You'll join one of 67,000 plus people that are already doing so today. Follow what they're doing at Supply Chain Management Dojo. And again, thank you so much for taking the time to be on today's episode!
Thank you! I wish you good luck, guys. Stay in touch. Cheers. Have a good day.
Dr. Muddassir Ahmed on LinkedIn