Keiretsu, which can be briefly described as a long continual business relationship, in one way or another, has been a significant force in the Japanese economy for over four decades and, despite its long and varied history, criticisms, the Structural Impediments Initiative, and economic downturns, is still a strong foundation for many supply chain relationships in Japan. But now it needs to be the foundation for supply chain relationships the world over.

Twenty years ago we were in a period of (rising) globalization. Opening markets with the (first) cold war behind us. Limited, contained, conflicts. Relatively stable fuel prices. Piracy (off the Ivory Coast) was being curbed. And with the introduction of modern e-Sourcing and e-Procurement tools, it was easier by the day to invite more (and more) suppliers to events, to swap them out on a whim for (semi-)commodities, and keep supply lines fluid.

Relationships went on the decline for all but the most strategic suppliers because they weren’t necessary. But that was then, this is now.

Now we have anti-globalization and isolationism. Sanctions and closing markets. Escalating conflicts and closures of seas, straits, and critical shipping lanes. Rising and unpredictable fuel prices. A resurgence of piracy. Suppliers failing as a result of a myriad of tariffs, trade wars, border closings, shipping lanes, etc. Carriers failing as a result of rapid rising in fuel prices, insurance, increased theft, seizures, and blockades.

Suppliers who can actually fulfill your orders that you can actually receive products from that were once a dime a dozen to add to the RFP are now few and far between.

That means, now, more than anything, with risk and volatility increasing by the day, relationships matter again. Relationships that are:

• long term: to create economic efficiencies that can help both parties survive the economic storm
• knowledge sharing: workforce and even executives
• business sharing: both parties buy from each other when possible and introduce throughout their partner networks
• stock sharing: of the financial or physical variety — that reinforces each partner’s financial status when relevant or ensures security of cross-supply when stock-outs must be avoided
• mutually beneficial asymmetrical trade: that works best for both parties

And relationships that can:

• move low-value-add production to subsidiaries
• ensure continuous high quality production capability to avoid excess production & consumer problems
• improve risk management, especially with regards to variable or uncertain demand
• ensure increased sales mean a corresponding increase for subsidiaries that are essential to the parent company’s survival
• prevent critical confidential IP and technological information from being disclosed to short-term suppliers that may not be so obliged to keep it in the future, despite agreements

Which can help keep your supply chains running smooth in these troubled times.