The Power of Supplier Collaboration and Rapid Supplier Qualification
As industries outsource more and exhaust their traditional sourcing opportunities, the time has come to increase and leverage the capabilities and, in some cases, the capacity of the supply base. Benefits range from better product or service features, to quicker time to market, to deeper access to new markets, and to extraction of resources from remote locations. For companies with a Plan B for a disruption of supply, this is an effective response in a time of crisis.
It is indeed an ill wind that blows nobody any good. Fruit company Chiquita found that out to its benefit in 1998, when Hurricane Mitch ripped through Honduras, where much of the well-known banana brand’s produce came from. The company actually increased its revenue by 4 percent while its competitor’s revenue dropped by exactly that amount.
The hurricane destroyed about $900 million worth of crops—including four-fifths of the nation’s banana crop. More than 70 percent of Honduras’ transportation infrastructure was washed away. Chiquita’s fruit was affected of course, but its rival, Dole, was hurt much worse; Dole lost 70 percent of its banana supply. What was Chiquita’s smart move? It was much more nimble, qualifying and signing up alternative suppliers in areas unaffected by the storm and activating deliveries from them. By being far more responsive than Dole, Chiquita was able to outperform its more powerful competitor.
Chiquita’s fundamental master stroke was to approach relations with its suppliers in a collaborative way. On top of that, it had built supplier qualification processes that enabled it to bring the new suppliers online in very short order.
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It is indeed an ill wind that blows nobody any good. Fruit company Chiquita found that out to its benefit in 1998, when Hurricane Mitch ripped through Honduras, where much of the well-known banana brand’s produce came from. The company actually increased its revenue by 4 percent while its competitor’s revenue dropped by exactly that amount.
The hurricane destroyed about $900 million worth of crops—including four-fifths of the nation’s banana crop. More than 70 percent of Honduras’ transportation infrastructure was washed away. Chiquita’s fruit was affected of course, but its rival, Dole, was hurt much worse; Dole lost 70 percent of its banana supply. What was Chiquita’s smart move? It was much more nimble, qualifying and signing up alternative suppliers in areas unaffected by the storm and activating deliveries from them. By being far more responsive than Dole, Chiquita was able to outperform its more powerful competitor.
Chiquita’s fundamental master stroke was to approach relations with its suppliers in a collaborative way. On top of that, it had built supplier qualification processes that enabled it to bring the new suppliers online in very short order.
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