Start weaving your brand DNA into the supply chain

For brands to connect with their final consumers, brands need to develop an authentic character or DNA as the core of their true differentiation. However, the DNA of a brand is not only based on the company’s doing but also the actions of your suppliers, the suppliers of your suppliers as well as your logistics service provider, distributors, retailers, etc. Therefore the DNA of a brand is a function of the entire supply chain. The question is: how can an authentic DNA of a brand owner be woven into the supply chain?

In particular in developing countries in Asia, there can be a great diversity of quality and food safety practices in the industry. One the one hand you have multinational and large local companies adoption high product quality and safety standards. Local SME companies on the other hand could not have adopted even the basic hygiene, quality and safety standards. Evidence supports that in the selection of supply chain partners ‘price’ is often a key determinant and other criteria are not clearly defined. As other criteria are not clearly defined, they are not well measured and quantified.  As they are not quantified, they are not evaluated in supply selection. The result is that at the end they are not incorporated in supply chain partner selection. This is a serious problem!

In fact, supply chain partners play a key role in protecting the product quality & safety of the product and in times of a crisis to minimise the negative impact on the brand. It is therefore time to weave the brand owner’s DNA systematically into the supply chain.

To do this three areas are of utmost importance:

1. Supply chain partner selection

In supply chain partner selection there are 5 essential steps to assess: 1. which evaluation criteria are important (price, quality, halal certificate, etc.); 2. how to combine criteria (are poor scores allowed?); 3. the relative importance of the criteria (what criteria has what weight?), 4. the scoring mechanism; and 5. method of awarding. In practice I find that many of these steps are either not correctly undertaken or skipped at all. Supply chain partner selection determines an estimated 50% of your supply chain DNA. Very important.

2. Contract & Audits

From my experience in supply chain diagnostics for MNC companies, contract clauses show serious gaps. Company values, principles and quality & safety standards are not well defined in contracts, measured and audited. In case you do not have your own resource, please outsource these tasks to supply chain specialists. Contracting & audits determine an estimated 30% of your supply chain DNA.

3. Supply chain relationship management

Supply chain relationship management is made concrete through training your supply chain partners in your values, principles, and quality & safety standards. This should not be a one-off engagement, but shall be repeated with annual refreshment trainings. Similar to the former point, outsource this when you do not have sufficient own resources. Supply chain relationship management determines an estimated remaining 20% of your supply chain DNA.

Weaving your DNA in your supply chain takes a coordinated effort by purchasing, sales, and logistics, to ensure a competitive advantage in today’s market. There is still much to be won in this area by brand owners.

This article was published in the New Straits Times (Malaysia) of 31 August 2016.