Reimagining Your Global Supply Chain as Strategic Partners

Pam Harper (00:00): As disruption in the global supply chain is impacting everything from groceries and restaurants to cars and computers, it's time to change the game. Find out what a leading expert on global logistics thinks about re-imagining your global supply chain as strategic partners. Join us for episode 199 of Growth Igniters Radio with Pam Harper and Scott Harper.

Chris Curran (00:33): This episode is brought to you by Business Advancement, Incorporated, enabling successful leaders and companies to accelerate to their next level of success on the web at businessadvance.com. And now here's Pam and Scott.

Pam Harper (00:50): Thanks Chris. I'm Pam Harper, Founding Partner and CEO of Business Advancement, Incorporated and sitting right across from me as always, is my business partner and husband, Scott Harper. Hi Scott.

Scott Harper (01:03): Hi, Pam. It's great to join you again for another episode of Growth Igniters Radio, and as always, our purpose is to spark new insights, inspiration, and immediately useful ideas to help visionary leaders accelerate themselves, and of course, their companies, to their next level of game-changing innovation, transformation and growth.

Scott Harper (01:24): Now, Pam, as the waves of economic impact from the global pandemic continues to role across all of us in the world, one thing that is so striking is the rising awareness of the fundamental importance of global supply chains. Now, supply chains used to be mostly in the thoughts of operations people, but now these issues are reaching top of mind status for many, many more stakeholders.

Pam Harper (01:51): Yes, especially for customers who are not used to looking at empty shelves and extended delivery times. We're seeing that the impact on revenue and profitability has elevated this to a major strategic issue for CEOs, C-suites and boards. They're considering ways of re-imagining their global supply chain.

Scott Harper (02:12): Now -- beyond strategy -- this is a major leadership issue. The question is, how can we change the game and work together with our supply chain partners to re-imagine what's possible in these relationships?

Pam Harper (02:25): Well, that's why we're speaking today with Patrick Daly, the Managing Director of Alba Consulting since 2005. He works with clients in manufacturing, distribution, and logistics services in Europe, Asia, and the Americas. He helps them achieve dramatic improvements in their supply chain capabilities and performance, In his consultancy assignments, Patrick lived and worked in Spain for 10 years and he's a fluent Spanish speaker. He also has a working knowledge of Portuguese, Italian and French. Patrick hosts Interlinks, a radio program and podcast on Dublin South FM that explores globalization and supply chains throughout the medium of interviews with entrepreneurs, business, people, academics and diplomats from around the world. And, in full disclosure, I was recently a guest on Interlinks and I very much enjoyed our conversation.

Pam Harper (03:25): Patrick is the author of the book, International Supply Chain Relationships, Creating Competitive Advantage in a Globalized Economy. He's the author of the ebook Thriving in the New Business Environment, Why the Strategic Supply Chain Matters, and he's contributed to chapter of the eighth edition of Global Logistics, New Directions in Supply Chain Management. Let's just move right over to the conversation. Patrick, welcome to Growth Igniters Radio.

Patrick Daly (03:55): Many thanks, Pam. I'm delighted to be here.

Pam Harper (03:58): We had such a great conversation on your program. We just have to keep going here. For people who are new to you, tell us a bit about what influenced you to grow to where you are today as a leading expert advisor and consultant on global supply chain issues.

Patrick Daly (04:15): Well, I guess it was a combination of my lifelong interests in history, geography and languages, on the one hand, and then merging that with kind of the things I had to do to practically make a living. I went and I studied engineering, as a young man, and I worked in manufacturing, as was pointed out, in Spain. I come from Ireland or rather, my family come from Ireland. I was born in Yemen in Arabia. My parents are Irish. And I went to Spain after college and worked in manufacturing. Working in manufacturing, as an engineer, the company that I worked for made storage equipment, such as racking and shelving and mezzanine floors and such things. I became slightly bored with the engineering and more interested in the applications and the use of that equipment. And that's what brought me into the world of logistics and supply chain, which I found fascinating. The idea of a systemic change supporting the world economy and the economy that we had become accustomed to.

Patrick Daly (05:24): I found that whole world quite fascinating. And in time I left that company, I came home to Ireland with a young family and I began to do consultancy work. And, very quickly I was working with lots of large multinationals, many of them American based, here in Ireland, who were using Ireland as a kind of a bridgehead into the European Union. That was the embryo of my consulting business, we're talking now maybe late nineties. In the intervening period, the business has become more strategic. We still have a very strong technical capability, but it has become more strategic. We get involved in strategic aspects with clients.

Scott Harper (06:06): Now, as we've been discussing, things have been changing, especially in the wake of the global pandemic. And the business world -- that's just about everybody who buys or sells anything -- is facing a paradox. On one hand, you've got the global supply chain that's more critical to all of us than ever before. But, at the same time, it's increasingly vulnerable to the uncertainty, disruption and inflationary forces that sometimes seem to come out of nowhere, all of a sudden. Now, as we watch, supply chain relationships are being redefined. Do you see this? Do you think this is the new normal?

Patrick Daly (06:47): Well, I have a view on that. Not really a new normal, but maybe a permanent abnormal or maybe in the sense that there never really was a normal. The world was always changing. It's just that many of us were insulated from the changes that were going on. This thing has kind of snuck up upon us. As mentioned, I'm quite interested in globalization. And, if you look at the history of globalization, you'll see, particularly since around 1970, when American multi-nationals started to figure that the whole markets were kind of saturated. And, they were looking for new opportunities, both to open markets and also to procure inputs and they started to look overseas. It kind of coincided with an increased focus on core competence. That meant that companies, that in the past, used to be vertically integrated. If you think of the Ford motor company in the 1920s, they owned everything from the mines to the rubber plantations to the High Street stores where the cars were sold. The company started to disintegrate, focus on their core competence, and they started to exercise control through relationships rather than through ownership. And supply chain management then became the methodology to try to have insight and control of that so that they could compete.

Patrick Daly (08:16): This thing has been going on, quite dramatically, since 1970. We're talking what, 50 years? But in recent times, things had already been changing dramatically. We had environmental impacts that were changing the supply chain. We had demographic impacts that were changing the supply chain, such as drivers and warehouse workers. We had geopolitical tensions such as the U.S./China tensions and technological changes. And COVID really has just been a catalyst or an accelerator for all of that. What we're experiencing at the moment is maybe some extreme turbulence, but these changes have been going on all the time. And I don't really think there was an old normal or a new normal, but it's certainly more turbulent now and we need to become accustomed to that.

Scott Harper (09:05): We have, as you say, this decentralization of supply chain ; it can make companies more vulnerable. And that's the question that we have to examine right now. It's no longer just an operational thing where middle management has to handle it.

Pam Harper (09:23): That's right. And, it's interesting that you're talking about the fact that this is been something that has been brewing for quite a while, and yet we're feeling it so acutely now. Maybe a little bit of, it could be sort of a non-virtuous cycle, where people are nervous and it's fueling it. I don't know. But what do you think is going to be the importance of strategic relationships for elevating the effectiveness of supply chain strategy? Is this perhaps a different way of looking at it or is it going back to the old way? What do you see?

Patrick Daly (10:00): No, it's not going back to the old way. I think the perception may be that, because the supply chains are so interconnected around the world, that we're more vulnerable. And, the truth is that because it's an interconnected system, something that happens far away in time or space can affect you locally. Something happens in China or a ship gets stuck in a canal in Egypt and all of a sudden you're not getting your garden furniture. And so, you feel that this interconnection has made you more vulnerable. But also at the same time, there's lots of redundancy and lots of options in the supply chain. It also makes us more robust, maybe even anti-fragile because supply chains will react and adapt to the difficulties that they're going through. And, this brings us to the point of the strategic approach. Companies, in the same way that the developments of globalization and the supply chain that resulted from that and became a feedback loop. One thing was feeding off the other. Snuck up on us over the years.

Patrick Daly (11:10): Likewise, within companies, the relationships. So now we don't have our own transport company. We contract that out. We don't make all of our own components. We buy lots of them in. We don't even do our own cleaning. We contract that out as well. All of these things kind of happened, but we never really thought about them strategically. And I think the point is to take pause and look at the world as it really is, not the way we think it was in the 1970s, and somehow hope that we can go back there. We can't, that's gone, that's dead. We have to look at the reality of the world now strategically, and think, how are we going to take advantage of this and how are we going to cultivate those supply chain relationships with these businesses who really are a part of our business now, and how are we going to prioritize those relationships and cultivate the ones that really are going to make a difference because they're not all created equal.

Pam Harper (12:08): Absolutely. We're going to take a quick break. And when we come back, we'll dig deeper with Patrick Daly, global supply chain expert, and author of International Supply Chain Relationships, about a few of the leadership issues behind re-imagining your global supply chain as strategic partners. Stay with us...

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Pam Harper (13:39): Welcome back to Growth Igniters Radio with Pam Harper -- that's me -- and Scott Harper. Today Scott and I are speaking with Patrick Daly, global supply chain expert and author of International Supply Chain Relationships about re-imagining your global supply chain as strategic partners. Patrick, how can people find out more about you, your book, your work and your radio show Interlinks?

Patrick Daly (14:05): They will find my website, albalogistics.com. My book, which is International Supply Chain Relationships can be found on amazon.com and just look up Interlinks Patrick Daly on iTunes, Spotify, Acast and all the other major platforms. You'll find me there. There I am.

Pam Harper (14:31): Wherever podcasts are found. You can also find out more information and links for this episode, by going to growthignitersradio.com, episode 199 and scroll down to resources. Let's go back to our conversation. In the first segment, we were talking about the backdrop, the context of what is happening in the global supply chain, how it's been elevated, really to a strategic concern now, and we see this all the time as we're talking with top leadership. Let's build on what it will take to elevate the supply chain from a primarily operational concern to a strategic level. Let's start out with looking at the supply chain relationship. Patrick, do you find that in your dealings with companies, do they consider their supply chain as a partner or a client vendor?

Patrick Daly (15:35): It varies. And really, it's a bit of a mess, to be honest. There isn't clear thinking. As I said at the end of the first section, not all of these partnerships are created equal. So, I think that people need to be thinking, first of all, to almost take stock and be aware of the way their business is constructed. And if they do that, they'll see that their business sits like a node within a web of connections. And those connections, everything, as we touched on in the first part, from the cleaning contractors through to the suppliers of maybe your most important ingredients for your product, whether it's a pharma product or a food product, or your most important components and all the services. You need to kind of look at these relationships and categorize them. Some of them are quite commoditized and they don't really need much more than a transactional relationship.

Patrick Daly (16:37): Some of them are value add. They are relationships that you need to look after, but if they were to break down, there are other options. Some of those relationships are very mission critical and if you lose them or they break down, you can be in big trouble. The problem I find is that people haven't thought through that. Sometimes they damage relationships that are very, very important to their business because they haven't taken that strategic viewpoint of the types, nature, and quality of the relationships that they have, and which ones are more important than others.

Patrick Daly (17:13): Also, once you've got those three groups, if you like, you've triaged your relationships, you need to think about them then in terms of their duration. Are they long or short term relationships? If we're building a new building, we have a project. We have short-term relationships with contractors, but which are very important right now. As again, say a logistics service provider, which might be relationship that could go on for a decade or more. What's the complexity of the relationships? Are we interacting with these other entities once a month or is it every day? Is it on multiple levels? Is it just two people, one here and one there? What's the complexity of the relationship, and what's the power balance? Are we a much bigger than them? Are they much bigger than us? Are we more or less the same? How should we structure the relationship and how should we play our cards, depending on our strength, our weakness, relative to the other person.

Scott Harper (18:04): And building on that, Patrick, we've seen in our discussions with people, that sometimes there is a disconnect and for something to be strategic, everybody in the organization has to, one, understand the strategy and the strategic context. There has to be a tie between the top leadership and especially in larger companies where middle managers are sometimes the ones who are interfacing with alliance partners, or supply chain partners, that the middle management has to be clued in too. Do you see sometimes that there's a stronger or weaker connection between that and what's the impact?

Patrick Daly (18:49): Absolutely. Perhaps best to illustrate it with an example. I've been involved in many projects where we are helping manufacturers and their logistics services providers to strengthen or build or change their relationships. Often you find that manufacturing companies will have begun the relationship with a logistics service provider many, many years ago, just for outside contract storage or whatnot. The relationship has grown organically over the years, and then the relationship becomes almost codependent. But, that co-dependence is not reflected in the attention or the care that goes into the relationship. As I said, it's kind of snuck up on them, like the whole process has snuck up on us over the last 50 years. People are interacting at the operational level or at a procurement level when the contracts come up for renewal and there's negotiations regarding to price and [inaudible 00:19:46] transactional. They miss the opportunity, both sides, to look at it strategically and to interact on multiple levels.

Patrick Daly (19:54): Maybe the CEO of one organization's interacting with the CEO of the other, and one saying, listen, we were a logistics service provider. We work for lots of people in your sector. This is what we're seeing are the trends in the market that maybe you should be aware of. Or, the manufacturer is saying, listen, we have big projects coming down the line. That's going to mean change for you, opportunities for you. If we were briefing each other or talking to each other at that level, it would be a very different relationship and sometimes those relationships go sour when they oughtn't to.

Pam Harper (20:26): The thing is, that what we're talking about is being able to see right around the edges of the organization. The more that we have true relationships with our supply chain and the people in it, and it's not simply, okay, this is our relationship. This is the contract.

Scott Harper (20:46): The transaction...

Pam Harper (20:47): Yeah. Very transactional. Absolutely. Building on that, in your opinion, what are the critical keys to re-imagining strategic relationships in the supply chain?

Patrick Daly (20:58): Well, I think probably the first one is to actually acknowledge that it is strategic and to realize that there is a golden opportunity in the supply chain to build resilience, even anti-fragility into your business. There are lots of options on diversification available, whether it's through having different sources of supply, different options for service, linking into partners in other markets that you're selling into, or that you're buying from sources of supply. I think it's also important to realize that supply chains are systemic and you need to think about them systemically. I don't mean systematically. That's a different thing. I mean, systemically. They're systemic in the sense that they're interconnected. While that may cause some sort of vulnerability, it also offers a lot of options and resilience. But, you need to be aware that small changes can have big effects in systemic systems. You need to be on the lookout for those. And, another thing about systems is the importance of connections. As we said before, to be really strategic about the connections and the nature of them, triage them and then examine them on the different levels of duration, complexity, and power balance, so that you have a strategy for each triaged sector of your supply chain relationships.

Pam Harper (22:33): Okay. You're, of course, an expert in the global supply chain. As we're dealing with all kinds of situations around the world, can we still stay strategic, even as we've got some real logistical issues with getting materials from point A to point B and we're seeing boats that are sitting out and unable to unload their merchandise.

Patrick Daly (22:58): Well, I guess this, like all things will pass. But, that particular issue, I'm working on several projects at the moment, helping importers in Europe. But, importers in America are experiencing exactly the same thing. This is one of the issues that the container, ocean freight problems at the moment. These are service and sets of relationships with freight forwarders that many companies had that were considered a commodity. It used to cost 1,500, $2,000 to bring a container in from Asia. It now is costing somewhere between 15 and $20,000. And what people used to do when it was a commodity, when it was based on price only, is they play the spot market and they had no relationships. When things went sour, there was no loyalty. There was nothing to fall back on, no relationship to fall back on. What is happening now, is that people are beginning to view those relationships with trade forwarders, as strategic relationships. We are helping them to negotiate new deals, long-term contracts. Not going to solve what's happening today, but it will avoid the same thing happening in the future.

Scott Harper (24:11): When you treat your supply chain partners, as partners, as people with personalities and needs and perspectives that are apart from what you do and you build trust, it's going to make everything a lot stronger. Is that what you're saying, Patrick?

Patrick Daly (24:28): Yeah, it's going to make the difference between being looked after or being overlooked, right?

Pam Harper (24:32): Absolutely. Well, we're going to take another quick break and when we come back, Scott and I will speak more with Patrick Daly, global supply chain expert, and author of International Supply Chain Relationships, about immediately useful ideas for re-imagining the global supply chain at a strategic level. Stay with us...

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Scott Harper (24:55): You are listening to Growth Igniters Radio with Pam Harper and Scott Harper, brought to you by Business Advancement, Incorporated. Here, we focused on enabling visionary leaders to dramatically increase momentum for game-changing results. And we're on the web at businessadvance.com.

Pam Harper (25:12): Do you consider companies in your supply chain to be strategic alliances or something else? From a survey we conducted of senior executives in over 15 industry sectors, we found that not everyone defines supply chain relationships the same way, and this can measurably impact your success.

Scott Harper (25:30): It really can. You can read about our findings and recommendations for increasing success of any external partnering relationship. You can download our special report, Building Powerful Strategic Alliances. Simply go to growthignitersradio.com. Select episode 199. Scroll down to the resources section and click on the link, download Strategic Alliances Report and feel free to contact us with your specific questions.

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Pam Harper (26:12): Welcome back to Growth Igniters Radio with Pam Harper and Scott Harper. Over the last two segments, Scott and I have been speaking with Patrick Daly, global supply chain expert, and author of International Supply Chain Relationships, about re-imagining your global supply chain as strategic partners. Patrick, remind people how they can find out more about you, your book, your advisory, and your radio show, Interlinks.

Patrick Daly (26:40): Okay. People can find out about me and my services at albalogistics.com. That's A-L-B-A logistics.com. My book is International Supply Chain Relationships, which can be found at amazon.com. My podcast is Interlinks, which you can find on all the major platforms, iTunes, Spotify, Acast, and so on.

Pam Harper (27:03): You can find out more information and links for this episode by going to growthignitersradio.com, episode 199 and scroll down to resources. This is the part of our podcast where we talk about immediately useful ideas. In this case, it's three immediately useful ideas for re-imagining the global supply chain at a strategic level. Patrick, let's talk about something people could immediately do as soon as they're done listening today. First idea.

Patrick Daly (27:36): If you're going to work on your strategy for your supply chain, maybe some things to think about as you're going through that exercise. I think the first is maybe to contradict Thomas Friedman is his book that the world is flat, is to realize that the world is not flat and geography still matters. If you're involved in international business and international supply chains, realize that where things are has a very big impact. Strategically selecting where you buy, where you sell, where you put operations, where your partners are, where they are strong and where they are not so strong is still very, very important. This idea that we can do business equally all over the world, and it makes no difference, the world is flat is wrong.

Patrick Daly (28:22): Second thing is perhaps to answer the question for yourself, why bother? Why would I diversify my supply chain? Why would I go international? Why do I want to deal with all of that complexity? Well, the reason is, that supply chains are systemic and because they're systemic, the whole is greater than the sum of the parts. You can get greater benefits and advantages and competitiveness from building strategic supply chains in that manner, than if you attempt to control everything yourself in the old way. And, perhaps the temptation now, particularly in large countries, like the U.S. to revert back to a pre 1970s world. That I don't think is going to be very advantageous in the long run, even if it feels maybe like a safe haven in the short run.

Patrick Daly (29:14): The third thing to do, is to keep looking around the block, at the future. Consider the environmental issues that are out there, the demographic issues that are out there, the geopolitical issues that are out there and the technological issues that are out there and build your strategy, taking into account what's going on in those areas?

Pam Harper (29:35): Okay, well, these are some great ideas. What is it that the board and the C-suite should be doing specifically different in regard to creating these relationships? I don't think we're talking about the way it was anymore.

Patrick Daly (29:52): No, I think perhaps creating a position at that table for a supply chain specialist, an expert, to sit at that table because oftentimes they will be dispersed among different lines of management and that understanding of the supply chain of being transversal and horizontal across all the different competencies of the businesses is often not fully internalized. I think that may be one of the most important things to get that voice of the supply chain up at the top table.

Pam Harper (30:28): And that's true. In fact, I know that there are some companies that are creating a special role. I think the Chief Supply Chain Officer. To me, it's also making sure that if there is that kind of special office that is negotiating contracts still, that whoever is sitting there has more of an understanding of the company's strategy. That was one of the things that came out of the report that we did, is when people who are negotiating contracts, even if they're not at the top and they don't have that understanding of what's really important. I mean, you've been talking about some wonderful things here in terms of the awareness that somebody who creates these relationships has to have. I'm glad to hear you talking about it. What do you think of the idea of having greater strategic awareness across the company so that people can truly create these relationships?

Patrick Daly (31:27): I think it's very important because in the absence of a strategic awareness, some other criteria is going to come in by default and often the one that comes in by default is price. Oftentimes I've seen relationships damaged and destroyed because you have a procurement person who defaults always to price and maybe putting service providers through the ringer every time the contract comes around for renewal, without understanding, one, the importance of the relationship, the difficulty of replacing that relationship if it breaks down and not really understanding the strategic aims and directions of the business. And, sometimes that's not their fault, it's because the strategy hasn't been articulated explicitly at that level. The strategy may exist at one level, but the implementation of the diffusion of the message, hasn't gone out to all parts of the business. I think that's very important and I think having the supply chain at the top table, and then articulating that down through all the different levels is crucial to make sure that the relationships that need to be looked after are looked after.

Pam Harper (32:41): In some ways, re-imagining our relationships with our external partners starts with re-imagining our internal relationships, so that we can actually create stronger and more responsive and imaginative relationships that can make a real difference.

Scott Harper (32:59): It really requires reinforcing, because there's one thing to say, hey, down there, you've got to be strategic, but that has to be reinforced. That has to be nurtured.

Pam Harper (33:11): Patrick, can you leave us with some final thoughts about re-imagining your global supply chain as strategic partners?

Patrick Daly (33:19): First thing, globalization is not going away. Despite everything that's happened, whether Trump or COVID or difficulties with the environment, globalization is here to stay. It's changing form, but don't believe that it's going to go back to the way it was. It isn't. Also, not all supply chain relationships are created equal, so be very discerning about your supply chain relationships and be strategic about where you dedicate your effort to nurturing those relationships, because you're not going to be able to nurture them all in the same way, nor should you. And finally, probably related to that, is not one size fits all. Every relationship is different in its duration, in its complexity and in its power balance. You need to think about each one on its own merits.

Pam Harper (34:14): This is great. Patrick, thank you so much for sharing your wisdom with us today on Growth Igniters Radio.

Patrick Daly (34:21): You're very welcome, Pam. Delighted to be here.

Scott Harper (34:23): Thanks, Patrick. And thanks to you out there for listening to Growth Igniters Radio with Pam Harper and Scott Harper. To get show notes and resource links for this week's episode, go to growthignitersradio.com, select episode 199.

Pam Harper (34:37): Until next time, this is Pam Harper...

Scott Harper (34:40): And Scott Harper...

Pam Harper (34:41): Wishing you continued success and leaving you with this question to discuss with your team,

Scott Harper (34:46): What can we do differently or better starting now, to think, and act more strategically at all levels about our supply chain partnerships so that they become stronger and more secure than ever.

Chris Curran (35:09): Growth Igniters and Growth Igniters Radio with Pam Harper and Scott Harper are registered service marks of Business Advancement, Incorporated. All Growth Igniters Radio episodes are copyrighted productions of Business Advancement, Incorporated, intended for the private use of our audience. Except as otherwise provided by copyright law, all other uses, including copying, editing, redistribution and publication without prior written consent of Business Advancement, Incorporated are prohibited. All rights reserved.