"The Navigator" News Blog

Is it a Supply Chain Problem, or a “You Chain” Problem?

We all know that things are difficult right now in the economy.  Product shortages abound.  Finding employees is a challenge.  In some areas, restrictions on the operation of your business still exist.  Costs and prices continue to escalate.  There’s no question about these issues – but some companies are still thriving in all areas, and some companies are struggling more than most.

It’s tempting to blame problems on “the economy,” as I wrote back in 2008 during a very different set of economic challenges.  But what I found then – and continue to find now – is that economic challenges have a way of exposing issues that were already existing in a company’s business model and culture.  Perhaps I should say that a strong economy can paper over those issues, and the rough economy strips the paper away.  Here’s what I mean.

There’s a restaurant chain with several locations in Kansas City, and all of those locations have two big things in common:  Huge wait times, even though the parking lot is nearly empty, and a list on the door of menu items that are unavailable.  The wait times are due to the fact that they are short-staffed, and the list is due to the fact that they are having difficulty getting product from their suppliers.  This is true of all of their locations – and it’s not the overall environment, since all these restaurants are located in the middle of other restaurants, all of whom are doing business more or less at a normal rate.

I was thinking of this as I had breakfast recently with a client of mine. This client employs a few hundred people in all phases of operating a large distribution company – sales, warehouse, drivers, customer service, management, etc.  He was telling me that he’s fully staffed, that he is meeting all of his customers’ needs for product, and that he is having a record year.  His competitors are struggling with the conventional issues of personnel and supply, while he is not.  He’s been challenged, to be sure, but he’s overcome those challenges.  How has he done it?  Well, the truth is that many of the things that he has done are simply good business practices that he implemented long before things got weird last year – and others have been skilled adaptations to the environment.

Treat your employees well:  This should go without saying, but it doesn’t.  He does the little things very, very well.  For instance, when his route trucks return from their routes, someone goes into them, picks up any trash, vacuums them, and cleans them up so that the driver has a clean, hospitable workspace.  He does the same with his office personnel.  It’s a little thing, but it matters.  Every employee, from the President on down to the person who does that cleaning, is treated respectfully and reminded that they are an important part of the machine that gets product to the customers.

Compensate appropriately:  Yes, wages are escalating.  Yes, some of this is due to forces outside simple supply and demand.  You can complain about it or you can do something about it.  He doesn’t overpay his people, but he pays them well and they appreciate it.  One thing that he does not do is pay sign-on bonuses.  His reason – a correct one – is that sign-on bonuses are a slap in the face of your current employees.  It sends a signal that the new employee is more valuable than someone who has been there.  Sign-on bonuses typically happen in high turnover environments, and perpetuate the turnover as current employees become dissatisfied.  Instead, pay everyone appropriately, treat them well, and you attract and keep good people.

Market your new hiring opportunities:  Most job listings are absolute junk.  Hiring managers take the lazy way out, and grab the job description out of the HR file and slap it up on the Web.  Make no mistake – hiring is a marketing project and should be treated as such.  Get your marketing department to write a killer ad that explains why anyone who reads it should be dying to work for you, and gives them a call to action.  Or, you could check out my Hiring Assistance Programs, and I’ll do all that and more for you.

Have great vendor relationships.  My client is able to get product from vendors – even when those vendors have to short other customers to get it to him.  Why?  Because he’s always treated his vendors and their reps well and with respect.  When supplies get tight, vendors are people too, and they’ll prioritize those who have treated them well and shown loyalty.  A couple of months ago, I participated in an industry roundtable Zoom call, and in this call, one dealer President complained bitterly that his main vendor rep was “screwing” them and not supplying them with the key product that they needed, while taking care of other dealers in his market.

Well, two years ago, I had presented at their sales meeting.  During this meeting, that vendor rep also presented, and his sales staff raked that rep over the coals. I mean, they just took it to him and enjoyed it.  It was immediately clear to me that they were mainly doing it for the enjoyment of it – none of their complaints at the time had to do with key issues like product quality or availability.  I could see the rep getting madder and madder, but he handled it like a pro.  I mentioned this to the President later, and he just laughed and said, “Oh, they always do that.”  During the Zoom call, I reminded him of this and said, “Hey, remember the fun you had at that meeting?  It’s coming back on you now.”  He got a little upset, but the truth hurts.  Take care of your vendors.  Oh, and the restaurant that I mentioned at the start of this article?  They are known for changing suppliers at the drop of a hat over the smallest price savings. Now they can’t get product at any price.

Have great customer relationships.  This should go without saying – but great customer relationships always help you through difficult times.  The trouble is that most salespeople and business owners don’t understand customer relationships.  They think they have a “relationship” with everyone who buys from them.  Read this article to understand the three levels of customer relationships.

Tell them what you can do, not what you can’t.  As I was about to finish this article, I had a call from another Smooth Sailing Coaching client.  He had a situation where a customer had asked him to speed up implementation of a service, and he’d told them that he couldn’t – so the customer went to another vendor who could.  On the face of it, this might have been inevitable, but it might not have been.  I coached him to instead, ask the customer for a bit of time to come up with a plan, and then come up with some sort of an action plan to start handling their needs more quickly.  Maybe it wouldn’t have worked anyway, but it might have.  The flat “no” simply sent the customer elsewhere.  Instead of saying “no,” take a little time and give them a positive “here’s what I can do” answer.  Customers are remarkably understanding.

The restaurant chain may not recover from all of their problems – but the companies who implement good fundamental practices like the ones above, and then improve upon them as they can, will be the winners in this or any other economy.