Supply Chain-Vendor Relationships Are Changing
Execs talk shop about the best strategies and biggest threats to supply chain success.
The evolution in vendor relationships dominated several presentations at this year’s Supply Chain Expert Exchange spring conference, held in advance of the 2024 National Restaurant Association Show.
Empathy, synergy, and redundancy pave the path for smooth supply chains today, the conference’s panelists said. Become a customer of choice The pandemic turned the supply chain on its head, and with it, many of the traditional ways of working with vendors. Restaurant supply chain specialists found out quickly whether their businesses were a priority for their vendors.
“Traditionally, we wanted to contract with vendors of choice, but today I want to be the customer of choice to my vendors,” said Donna Eskew, CCO, Supply Management Service Inc. (Popeyes), during the session, Unlocking Distribution Strategies. “How do I become that?”
Some of it is basic hospitality, and empathy, she stated. “Do your store teams treat drivers as the partners they are? Do they offer them food or drink? Are they ready for shipments? Is the parking lot clear? Can your units be somewhat flexible on delivery time, and provide delivery windows vs. dictating exact times?”
In general, are you easy to supply?
Today more than ever before, developing deeper relationships with suppliers on all levels is critical to business continuity and innovation, conference presenters agreed. Make vendors true partners “We are taking a serious look at our vendor portfolios to determine the ones who are transactional partners and ones who are strategic partners that will help us elevate our food and guest experience,” said James Butler, SVP & Chief Supply Chain Officer for Brinker International, at the session, What’s Keeping Supply Chain Executives Up at Night?
“We know that to succeed today we need strategic partners,” he said. “That means inviting the supply base into restaurants so they can understand the challenges of the operations and give their input on ways to innovate for improvement. In the past, we positioned suppliers to execute very specific specs, and haven’t necessarily allowed them to bring innovation and ideas to us. It takes transparency and trust.”
“I agree and think it’s important to build those relationships on multiple levels of your organization,” added Kirsten Michulka, President & CEO of Independent Purchasing Cooperative (Subway). “We’ve found suppliers want to hear not just from corporate supply people, but the brands as well, to know what’s happening at the brand level and feel like they’re a part of it.”
Several presenters recommended inviting vendors into stores to work alongside crews, so they can see how their products are used.
“I’ve got a few suppliers who have asked me to set up boot camp in the restaurants so they can spend the day making fries and burgers,” said Joel Neikirk, CEO of Restaurant Services Inc. (Burger King). “Those clearly are our supplier partners. Once they get that experience, they’re going to think innovatively about how they can help our business.”
In addition to inviting their vendors in, supply chain specialists also recommended arranging for their brands’ C-suite teams to visit distribution centers and manufacturing and processing plants.
“Exposing brand executives to more of the behind-the-scenes process not only fosters connectivity with our suppliers, but also exposes them to more of the manufacturing and fulfillment process,” said Anissa Mandell-Chance, President of ARCOP Inc., the national supply chain cooperative for Arby’s Inc. “Many of the leaders come from a marketing background and don’t have a sense of the intricacies of supply chain fulfillment. They come away understanding that supplies don’t move on a dime and that suppliers are the ones making it possible to serve our guests.” Build redundancy into your supply chain The traditional model—procuring the lowest cost through a single vendor—is not as viable today, the panelists claimed, noting that the alarming increase in catastrophic weather events, geopolitical upheaval affecting distribution around the world, and cybersecurity threats mean a restaurant brand without backup supply options is at major risk for supply disruption.
“You have to have a redundancy of suppliers in diverse geographic locations,” Subway’s Michulka said. “If you source from one place and that place is hit, you’re in trouble. You need to have second-tier sources in your portfolio for key ingredients.”
According to several sources, talk of cybersecurity threats was especially sobering.
“Prior to five or 10 years ago, I never had a conversation about a cyber event with my suppliers,” Michulka said, “but now we’re asking what they’re doing within their organizations to be prepared.”
Brinker’s Butler added, “We’re very capable when it comes to geographic redundancy, but if you have the same major supplier across the country who gets hit in a cyber incident, it would take everything out.”
And all of them said it isn’t a matter of if, but when, a cyber event will happen.
Read more about the Supply Chain Expert Exchange here.
