As manufacturing resumes despite the continued spread of COVID-19, new rules limiting corporate travel are making it difficult for original equipment manufacturers (OEMs) to perform their typical spot checks on suppliers.
With co-located operations and just-in-time delivery, OEMs have adjusted to treating their supply chains like extensions of their internal capabilities. This crisis is going to indicate which suppliers they can fully trust in the future.
As we learn to navigate this impersonal, low-contact, teleconferencing world, trust is becoming the world’s most valuable resource. Although it’s always been important to have faith in suppliers and employees, the inability to regularly monitor behavior is very challenging for businesses that are used to having more control.
Managers have had to learn to trust that employees working from home aren’t playing video games (20 Zoom calls a day can offer assurance, but that doesn’t help productivity). Potential customers have to trust that the vehicles they want to buy match the ones in dealers’ ads. Plant managers have to trust service technicians when they say they’ve completed system upgrades and tests.
This uncertainty has created a massive opportunity for suppliers to prove their worth and strengthen their relationships with OEMs – simply performing up to historical standards will show that purchasing managers were right to choose the supplier before the crisis began.
Conversely, the penalties for failure will be extreme.
In early June, Ohio’s economy began reopening, and my daughter began driving her car for the first time in several months. Not surprisingly, one of her tires was close to flat. I told her to take it to the national chain dealer where we bought the tires to get it checked for a leak.
The store called later in the day, said they’d found and patched a small leak, and the car was ready. Immediately as she drove out of the parking lot, however, the low-pressure warning indicator lit up. We tested the tire at home, and sure enough, it was at 19psi, barely more than half its 35psi rating. I called the store, and the manager apologized, saying they checked the wrong tire.
Although mistakes happen and can be forgiven, this misstep showed the store can’t be trusted. In its literature, the company promised to perform thorough multi-point inspections of each vehicle before beginning service. They promised to reset sensor readings. And, they promised full inflation of all four tires, regardless of what service had been performed.
Had they simply followed their written, highly publicized policies, they would have inflated the proper tire and checked for leaks. Instead, I learned that their promises were hollow, and price premiums I’d paid for better service were likely wasted.
Companies that take the lack of supervision as license to cut corners will be discovered when parts fail inspection, or worse, years later when vehicle components fail. If a supplier proves that it can’t be trusted during a crisis, the odds of winning future work all but disappear.