Customer of Choice Assignment
You are the Chief Supply Chain Officer for a Fortune 500 company. You have experienced many supply chain disruptions during the past 12 months while the world struggled through Covid-19.
Through the grapevine, you are hearing that your competitors did not always experience the same disruptions that your company experienced. You are realizing that your company may not be the customer of choice for some of your strategic suppliers, which is troubling. You start to investigate reasons for your standing with suppliers and quickly find these two data points:
Early in the Covid-19 crisis, your company’s CFO decided to extent payment terms to suppliers (from Net 30 days to Net 45 days) to conserve cash for the company. Given that the company has now paid suppliers in 45-50 days for the past year, the CFO does not think we need to return to Net 30 days (and if we did, she would have to answer to Wall Street as to why our cash reserves decreased!).
When you asked your Sourcing Director for a list of strategic suppliers, he stated that all suppliers are strategic…after all any supplier could miss a shipment and shutdown our company’s production lines.
How will you respond to the CFO and help her understand why it is important to pay our suppliers on-time?
What is your response to the Sourcing Director? In this response, make sure that you are not only thinking about Customer of Choice, but also, other topics that we have discussed this semester.