Supply Chain Solutions No.25 – Is GUT based Supplier Sourcing Rational?
When evaluating suppliers, both services orientated and manufacturing, when you first meet the potential supplier, and based on the immediate surrounding, your gut forms a first impression. Then the little voice of intuition kicks in giving you that first 10-second verdict, the question is should you listen to the little voice or not?
Most Asian supplies will try to get your gut on-side by taking you out for a ten-course meal, this is not the gut I am talking about, it is the emotional gut of instinct and intuition.
Based on some of the simpler things in life, if you go shopping, and you see something you like, spontaneously make the purchase because you believe it is right, 60% of the time it will be the correct decision. If you ponder the decision and weigh the pros and cons, deliberating your decision decreases accuracy, with most of this process been an emotional one.
So what about when the stakes are higher. I have heard several different points of view but an adage is if you have 10,000 hours building a particular skill you become an expert, and as such the right side of your brain becomes more familiar with patterns and can instantly within seconds signal if something is suspicious or unfamiliar. These patterns can be formed about people or events that remind you of situations that have occurred in the past both positive and adverse.
I will be the first to say that some people are naturally skilled at certain tasks due to genetics, a particular socioeconomic environment or purely tenacity. Everyone is different, but some level of life or work experience is necessary to generate the intuitive response.
Personally, on a few occasion, I have overwhelmingly wanted to leave the evaluation because my gut said get out. This is where rational thought needs to come into play unless you are personally at risk which is unlikely in this situation, it is best to continue the evaluation process as if it was a blank sheet and try to eliminate any preconceived ideas. Conclude the assessment and get to know the vendors team, this is where filling your gut can be a good way to learn informal information. Occasionally the vendor may also have a preconceived idea about your organisation from something heard on the grapevine which has left an instant negative opinion.
If on completion of the evaluation your gut instinct or spider sense still is telling you to be wary, write it in your evaluation. It is important that you complete all the assessments in the current sourcing cycle, benchmark all suppliers pricing, key performance indicators, and perform a SWOT to form an accurate measure of the supplier’s ability.
Where benchmarking gives a favourable result to the supplier where the gut doesn’t, and the completed analysis suggests giving the supplier a trial, do with caution but only after all ethical and quality assurance audits are complete. I for one follow my gut, if my gut strongly said no then I wouldn’t waste additional resources to complete further evaluations.
There have been several times over the last twenty years where my gut has said no, but due to the circumstance such as capacity challenges or where there was a need to push the boundaries to maintain margin, I have proceeded with caution. But in most cases it was not sustainable, something went wrong resulting in a product that was not fit for market or the end retailer.
Are you developing a sustainable supplier matrix? Regardless of your current vendor evaluation process, are you getting a compliant, fit for the market product at a value price?
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