Kate Vitasek isn't a big fan of conventional wisdom.

Supply Chain Managers, she suggests, have exhausted the value of so-called best practices. “It’s a last century concept,” she says, “and it’s encouraged businesses to pursue one-size-fits-all solutions.” To succeed at sourcing across today’s global and dynamic supply chains, Vitasek advocates a new set of priorities. Instead of adhering to accepted best practices, leaders have got to make an effort to identify the true best fit.

Unfortunately, outmoded thinking is still the norm for even many ‘leaders’ within the space.

“When you look at Procurement’s curriculum,” she remarks, “a lot of what’s taught is based on thinking from thirty or forty years ago anchored in transaction-based thinking.”  Transactional approaches – which drive the vast majority of sourcing efforts and define supplier relationships - has its roots all the way back in Adam Smith’s The Wealth of Nations. While that 1776 publication fits perfectly on a first-year economics syllabus, it’s less applicable to the daily concerns of a Supply Chain professional looking to adapt and innovate.

Vitasek doesn’t object to the invisible hand or the Kraljic Matrix simply because they’re old concepts. Rather, she rejects the style of supplier engagement they encourage. By placing an emphasis on power, they’ve perpetuated the (mistaken) idea that to integrate with a supplier is to become disempowered. In reality, “a well structured contract that aligns the interest of a buyer and supplier can be highly motivating for the supplier to make investments in innovation and drive incredible value creation for both parties. The trick is designing the agreement to be fit for purpose versus trying to employ conventional transactional and power-based risk-shifting contracts.”

Alongside researchers at the University of Tennessee, Vitasek has outlined a continuum of seven business models for supplier engagement. With purely transactional agreements on one side and Equity Partnerships on the other, it provides a starting point for professionals looking to build strategic partnerships. Most importantly, it challenges them to look beyond negotiations and distinguish themselves as architects for sustainable, adaptable agreements.

Next week, she’ll discuss these sourcing models and advocate for a more collaborative, outcome-focused approach to supplier engagement at ISM2019.

“My focus,” she says, “is strategic sourcing in the new economy.” She defines this new economy as nimble, flexible, global, and altogether unpredictable. It’s created a world where Supply Chain managers have a lot to worry about, but it also presents an exciting opportunity for leaders who are willing to unlearn their bad habits.

Vitasek acknowledges that a new way of building business relationships is often a hard sell. She elaborates, “If you’ve learned to view leverage as your most valuable asset, you’re not likely to abandon that idea.” That’s part of why she says she is on a 20-year plan. Instead of asking businesses to change overnight, she encourages a gradual process to help organizations make the necessary paradigm shift.

Incoming generations give her hope, however, that smooth transitions will soon become the norm. She suggests that young professionals are entering the workforce with an emotional intelligence and collaborative spirit that’s not always easily taught. They’re natively equipped to walk the walk when it comes to reaching win-win agreements and developing new, more inclusive definitions of value.

Change will only grow more imperative as supply chains grow more expansive and technology grows more robust. Still, Vitasek reflects, “Change is hard.” For many, even a highly compelling case study won’t inspire the necessary action. She advises these skeptics to run pilot tests of their own. They might also consider attending her presentation on Day 2 of ISM2019.

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Bennett Glace

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