Where's the Value (Part 1)?
Today’s market conditions are tough. Everyone needs to find cost savings. Any supply chain executive supporting the cost cutting initiative, at some point, will be thinking: "Where and how do I get more value out of my supplier base?"
In this multipart series, I will explore a few options. This first part focuses on seeking out smaller players and making yourself vulnerable.
The 'Risky' Plan: Seeking Smaller Players
One way is to seek out smaller players in the market for specific goods or services. This means not going the easy route with your usual suspect suppliers. “What? That sounds like a risky plan”, I hear some of you saying. Well, riskier, yes, but I believe that the reward far outstrips the risk and the risk can be managed. Let me explain...
Once you have gone through the usual process of identifying smaller (but not less competent) players in the market and you are in a position to award some business, do the following: make yourself vulnerable by giving them a chance (and let them know it).
The Psychology of Opportunity
I’m not saying that you bank the farm and leave yourself and your business completely exposed. It’s a balancing act and you will know how much calculated risk you feel comfortable taking...but let the other party know that you are taking a risk with them. Why would you do this? Well let’s think about the psychology behind this move. Everyone responds positively to someone giving them a break or a chance to prove themselves in life. Take a look at yourself. How would you respond if your boss said to you that he is “taking a chance” on you because he believes that you can offer something better or different. S/He see’s potential in you. He is putting his trust in you to deliver. How does that make you feel? You want to prove that s/he made the right choice. You want to reward him for his trust in you to deliver. You feel special. You will go the extra mile. You will do what it takes.
Why Doesn't This Happen More Often?
So, no rocket science here right? So why doesn’t this happen more? I think this is because many companies are filled with rules and overly negative consequences towards decisions that are out of the ordinary. RISK is a four letter word! If they choose one of the usual big “incumbent” market players to provide the service/products, there is less perceived risk to the individual making the decision. This is a topic for another time.
The Reward: Unlocking Value and Driving Competition
Now I am not saying that you shouldn’t go with the established big brand names, but understand what you are getting…and understand the risk/reward relationship. Perhaps there is a smaller player, who is itching to prove that he can get the job done better, faster and more cost effectively. You will look like the hero for developing a smaller market player and unlocking significant value. You may even shake up the current establishment of big, slower, arrogant players in the market, who will think twice about providing you with the same vanilla solution in future.