{"id":1797,"date":"2018-05-03T15:04:03","date_gmt":"2018-05-03T15:04:03","guid":{"rendered":"https:\/\/www.certitrek.com\/nlpa\/?p=1797"},"modified":"2021-07-28T06:41:38","modified_gmt":"2021-07-28T10:41:38","slug":"are-your-suppliers-barnacles","status":"publish","type":"post","link":"https:\/\/www.certitrek.com\/nlpa\/blog\/are-your-suppliers-barnacles\/","title":{"rendered":"Are Your Suppliers \u201cBarnacles?\u201d"},"content":{"rendered":"

There was quite an interesting earnings call yesterday from Tesla (the automaker, not the awesome rock band).<\/p>\n

CEO Elon Musk vaguely disclosed some restructuring that the company would be doing in order to better progress towards its profitability goals. \u00a0He specifically addressed an apparent problem with Tesla\u2019s over-reliance on a bloated supply base.<\/p>\n

Business Insider published the following quote\u00a0from the call:<\/p>\n

\u201cThe number of third-party contracting companies we\u2019re using is out of control,\u201d [Musk]\u00a0said. \u201cWe\u2019re going to scrub the barnacles on that front. We\u2019ve got barnacles on barnacles. So there\u2019s going to be a lot of barnacle removal.\u201d<\/p>\n

Oof. \u00a0Calling suppliers \u201cbarnacles\u201d publicly. \u00a0In my 22 years in procurement, that\u2019s a new one for even me!<\/p>\n

Suppliers can provide an organization\u00a0with expertise and productivity that it just doesn\u2019t have and can\u2019t efficiently develop in house. \u00a0To speak so derisively of such resources could set the procurement world back centuries.<\/p>\n

But, let\u2019s consider: \u00a0Are organizations starting to reign in the ever-increasing outsourcing that has become the norm over the past 20 years?<\/p>\n

Well, in one unrelated development,\u00a0Walmart built its own dairy processing plant to supply its own store-brand milks. \u00a0This was a big blow for companies like previous supplier, Dean Foods, and all of the farms from which it purchased milk. \u00a0For a giant in \u2013 and master of \u2013 their space, this vertical integration with an old-school industry was certainly surprising to me.<\/p>\n

If there is one truism in business, it\u2019s that companies play \u201cfollow the leader.\u201d \u00a0Will Tesla and Walmart lead the way towards more vertically integrated supply chains? \u00a0Has the outsourcing pendulum swung away from the \u201cget someone else to do everything except your core competency\u201d mentality that has been the way things have been done for nearly a generation?<\/p>\n

There could be an interesting shift of the tide on Procurement Beach soon. \u00a0Stay tuned!<\/p>\n

Recommended Reading<\/b><\/p>\n