15 January 2024

As we remember the vast and important legacy of Dr Martin Luther King Jr here in the U.S. I was reflecting on the importance of reputation.  He was known as a man of integrity and his ability to garner trust was legendary.  With his guiding leadership, he was able to help change a nation and history.   

To me, it’s implied that your integrity is at the heart of your reputational value.  It’s no surprise that leadership training content includes integrity as a key element.  Such as the U.S. Marine Corps leadership training slides here.  Or this article from Babson College found here.  And while I’m not writing of one of the multitudes of cyber breaches (I’ve lost count), I am writing today about supply chain and reputational risk. 

In a nutshell, integrity is foundational to trust.  And without trust, you’re far more likely to fail.  In some cases, spectacularly as is the case with Boeing.  The most talked about recent issue that Boeing is facing is related to a door on a 737 Max 9 flying from Oregon that blew out a door plug.  The videos were everywhere and struck fear in many travellers hearts as they watched one of their worst fears on popular media platforms. 

Of course everyone has a theory as to why the problem occurred.  One such theory is the use of a thrid party to make the fuselages for the 737 Max 9.  Some curious reporters dug up the dirt on the thrid party, Spirit (no relation to the airline) Aeorsystems.  Surpsingly, they appear to have been a spin-off of Boeing.  Not so surpring is that they were the defendant in a class action suit alleging quality issues were rampant.  You can see a short story about them here. 

But does it matter? 

No, not really.  The damage is done.  Why? Because Boeing is the name of the seller and anyone that buys from them expects better.  Just like your company and your supply chain.  Nobody cares if your supplier is the one that lost your data – they entrusted it to you and had no say in your pick or management of the supplier.  If something goes wrong, customers will hestitate or not buy from you if they feel they can’t trust you.  China Southern Airlines is holding off taking delivery based on the quality issues reported. They haven’t even seen the planes for themselves yet. Other airlines may decide to buy from other suppliers.  The cost of regaining trust can be exorbitant.    

The same can happen to you if you fail to control risks in your supply chain.  Your integrity will be questioned and your loyal customers will go elsewhere if they feel they cannot trust you.    Managing your supply chain is not that hard, but it does take effort, discipline, and commitment.  It helps if you know what’s at stake.

#thatthirdpartyguy #reputationalrisk #supplychainrisk