The Power of Supplier Collaboration and Rapid Supplier Qualification

This is an excerpt of the original article. It was written for the September-October 2013 edition of Supply Chain Management Review. The full article is available to current subscribers.

September-October 2013

The 2013 ranking of supply chain leaders from Gartner highlights the best of the best—large, global companies that are furthest along on the journey toward demand-driven supply chains. While the mix of companies is diverse, there are lessons to be learned from these supply chain leaders.

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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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