Horsemeat or expansion – the supply chain conundrum
When Laura Weidinger from the Beyond Profit Business Course asked me to speak at King’s College, Cambridge I was delighted – and for 3 reasons. Firstly, here is a group of students self-organising in a very entrepreneurial way and in their own time to put together their own business programme. Secondly, they have attracted a class of twenty four students who see the value of the social enterprise approach – that is encouraging for all us maturing social entrepreneurs who want to see the spirit of socially useful business being continued but finally I was delighted because Laura wanted me to talk about Supply Chains.
Supply Chains? I hear the exclamation. Isn’t that dull stuff about buying ingredients – how can that be either critical or interesting? Well, for me Supply Chains are critical to any business but they are especially so for social enterprises. Unfortunately however, I see too many social enterprises try to go it alone without a supply chain and that causes real problems for them as they try to expand or improve their service.
So my opening gambit to the Beyond Profit (much better name than “not for” profit by the way) students was if you thought the supply chain wasn’t important or critical think of horsemeat lasagne. A quintessential supply chain crisis if ever there was one. The whole reputation of each of the major food brands caught up in this crisis (and I predict there will be a lot more implicated before it calms down) is bound up in the quality of the meat they get from their suppliers. And yet they have signally failed to properly monitor and check that what they received is what they ordered. That neglect will cost them millions and may even put some out of business.
So managing your supply chain is critical. Each company should think carefully about what it buys from others and how critical to their business each purchase is. If the answer to the question “Would something going wrong in this supply chain dramatically impact on our reputation and our ability to do business?” is “Yes” then you should be taking every step possible to ensure that the supply is up to the standard you need it to be. Site visits, inspections – whatever it takes. If the answer is “No” but it would be inconvenient then a less assertive checking regime would be appropriate. And always have an alternative supplier ready in the wings!
So the horsemeat scandal is yet another warning that properly managing supply chains is absolutely crucial to any business; but that should not put off social enterprises from having one! I have met so many social enterprises who try to do all the main aspects of their business themselves. Homelessness charities that collect furniture, store it, sell it and deliver it. Each phase requires very different skills and processes. Each phase has different customers ranging from middle class people disposing of items to very deprived people being rehoused in very difficult circumstances to council officers and landlords. Each one requires a different language and assesses performance by different measures. Typically, organisations are very good at one and possibly two parts of the process but consistently struggle with the other aspects. Trying to be a jack of all trades and master of none restricts how much you can grow and means that you are always frustrating one or more important parts of your business. And it’s precisely those frustrations that give competitors a way in to your market.
So as I said to the students in Cambridge – the supply chain is a double edged sword. If you manage it badly it will hurt you but if you don’t have one you cannot protect yourself from the competition and you will struggle to grow.
Happy to report that my session was well-received. Laura’s feedback was “You amazed our participants – 80% of them gave you 5/5, 10% a 4/5 rating. Thanks again for the session and we hope you enjoyed it as much!” I enjoyed it very much, thanks Laura!