Trust and Security in Global Supply Chains: Procurement Strategies From Molly Louthan
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Molly Louthan is the former managing director for North America at State of Flux, a procurement and global supply chain consultancy based in the UK. Now the owner of Open Range, a full-site building, design, and landscaping company that has completed more than a billion dollars in projects, she has spent more than 20 years working directly with Fortune 500 companies. Outside of her work in procurement leadership, she has dedicated time to empowering women executives by participating in the foundations Women for Strategic Sourcing and 2020 Women on Boards.
We sat down with Louthan to discuss the sudden spotlight on global supply chains and how they have been impacted by worldwide lockdowns and global instability. The following Q&A has been edited for space.
Q: The COVID pandemic showed us how vital the global supply chain is. How have the events affected the professionals in the global supply chain community?
A: It’s an exciting time in the supply chain and procurement industry because we are emerging from the shadows for a lot of organizations. Most of the time, you don’t have to think about our discipline because products and services just show up. Now, we’re seeing that for these big and complex companies, the supply chain is at the heart of getting us the things we need to keep organizations running and to keep people safe.
Q: Now that the global supply chain is stepping into the limelight, what positive changes will that new attention bring.
A: Traditionally, our discipline has not received the technology and funding that front- of- the- house teams, like sales, have. The same level of investment has not been made in supply and procurement, so we’re seeing a need for that to change.
Our research shows that around 86 percent of Fortune 500 companies manage billions of dollars of spending on Excel. That’s outdated. So we’re advocating for advancements in technologies, tools, and resources, and we’re showing why there should be an investment in supply chains and procurement.
Q: A lot of the supply and procurement business seems based on trust that’s built up by personal relationships. Deals are made over dinners or in social settings. When the world abruptly shifted to a remote environment, how did you replace the interactions, bonding, and trust that make up the fabric of the global supply chain community?
A: It’s an excellent time for companies to bring in authenticity and transparency about what’s happening in their operations.
- Relationships are the priority. It is now harder to build relationships without the opportunity to grab coffee, lunch or dinner. Find ways to replace these causal interactions by taking more time on calls to get to know those on the other end. Being able to understand what people are personally and professionally facing day today will make you a better partner.
- Wave goodbye to desktop tools. It is time to challenge traditional IT strategies that don’t allow for company-to-company collaboration.
- Build a joint account plan. It is easy to like the idea of collaboration on a call, but it needs to be brought to life on paper. Success will see the business willing to work together on joint business plans. Then, get ready to talk about it regularly.
The people who do that best will be in the best position moving forward in this remote world.
Q: One of the interesting things about the transition to the remote environment is how problem-solving has to shift. Global supply chains are under enormous pressure right now, but you can’t just walk over to someone’s desk to hash out solutions or throw ideas on a whiteboard. How did your clients handle this change?
A: There’s still a need to figure out how to share information efficiently in the digital space. For many companies, the only way they sharet data with their suppliers or with any external entity is to download a file, typically in Excel, and then email it out.
That makes us incredibly vulnerable since Excel is one of the best places for hackers to hide. It doesn’t take a very sophisticated hacker to drop some malicious code into the millionth cell on an Excel spreadsheet; it’s a dangerous and simple entry point into companies.
We need to create supplier relationship management systems where both the customer and the supplier can log on and look at the same data simultaneously. State of Flux’s SupplierBase is a relationship management tool that helps organizations collaborate and share information in one central system. It is less about the fact that companies do not have SaaS solutions; it is the fact that the SaaS solutions they have do not connect company to company to share data. Most organizations have spent a lot of money on systems that they then export into excel and send via email.
In the short term, we need to create systems to connect suppliers and customers in a way that optimizes the available technology while keeping everyone secure. Sometimes, in that exchange of data, there are highly sensitive bits of data and information that you wouldn’t want leaked. So, I believe in the next year or two, CEOs should focus on creating those solutions around data sharing and security.
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