‘Trust Me, I Have Your Chips Right Here’

Estimated reading time: 2 minutes

When making the decision to purchase materials, there is a strong benefit from a trust in the supplier. When materials are in short supply, however, there is no time to establish trust with a new supplier, especially when it’s the only one that can fulfill a requirement. While the manufacturing world is seeking methods to find trust with previously unknown suppliers, there are also those who are getting cleverer at disguising their often-nefarious activities—ones that could bring catastrophic results. In the real world, how can supply chain trust be established and maintained, or is it safer to assume that everyone is out to get us?

Trust Me
Long-standing supply chain relationships once dominated the industry, with quite personal interaction between companies that brought investment in mutual business opportunity and growth. There were, of course, examples of “bad apples” in the “family,” individuals taking a selfish approach that sometimes compromised the relationship, but it was quite rare, relatively visible, and reparable. As the world has expanded over the years, companies are now larger, more remote, and more anonymous. In social media posts, we occasionally see extreme opinions and challenges being shared, knowingly or even intending, to be hurtful. Anonymity shields the protagonist from potential repercussions, reigniting the “us vs. them” narrative that is opposite in nature to the trust in relationships that we want to build.

As companies increase in size and become more remote, purchasing relationships change, with dedicated roles within each organization taking on more control, and a wider view. Trust can be destroyed by a warehouse operator or van driver, likely to be earning relatively little, who can be more easily corrupted. Counterfeiters and others are, by contrast, becoming quite clever and sophisticated in their attacks and cover-ups, and are very skillful at identifying potential targets. Maintaining trust in existing supply chain partners becomes increasingly difficult, never mind the selection and onboarding of new suppliers. We are all at the mercy of the weakest links in our organizations, those who believe that a short-term gain will not result in responsibilities or consequences for those people and organizations that they care about.

For the Lack of a Single Part
The pressure is on. With material shortages in the supply chain (real or perceived) being a fact of life, doors have been opened to new sourcing strategies. With opportunities taken by many to hoard materials, things are worse than they needed to be. Just one missing part in a BOM containing potentially thousands of items is enough to halt production. As product lines change, overstocked and unusable materials become available, a burden to the holder in terms of investment, space, and depreciation. Off-loading such materials back into the supply chain can generate more profit than using them in assembly, if you can sell at the right time, to a desperate customer who will pay an extraordinary amount to fulfill the final line item in the BOM that prevents the company from shutting down a configuration, and risk disappointing a customer. It’s the balance of risk vs. pressure tips. For counterfeiters, there has never been such an amazing opportunity to simply piggyback on this trend.

To read this entire article, which appeared in the January 2022 issue of SMT007 Magazine, click here.