Monthly Archives: September 2026

It’s Time For a Resurgence of Keiretsu!

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.

What e-Sourcing Is Not – A Necessary 7-11 Update!

Twenty years ago we wrote a post on e-Sourcing Resistance and what e-Sourcing is Not. In that post, we began by referencing “The 7 Myths of e-Sourcing” by the great Tim Minahan (before he went over to the dark side), where he tried to dispel the myths.

Since the original myths still persist today, we’ll start by reminding you of those — and then address the new myths that have arose / are arising so you don’t lose the path.

Tim’s Original 7. e-Sourcing is NOT about

  • lowering prices: it is about getting the best, fair, price you can get on a product, or service that meets your needs, but not about squeezing supplier margins so thin they go out of business
  • unfairness to suppliers: it’s not about forcing out or limiting to preselected suppliers, but creating an open, level, fair playing field
  • unfairness to incumbents: it’s not about forcing incumbents out, it’s just about ensuring they also play on a fair, level, playing field
  • keeping suppliers out: it’s not about making business more difficult to win, but easier to win
  • sales cycle lengthening: it’s about making sourcing processes right-lengthed
  • supplier burdening: it’s not about adding costs, technology, or resource requirements — but minimizing the burden on the supplier
  • eliminating relationships: it’s about finding the right supplier to build a relationship with

but with the rise of technology, and, AI, in particular, a new set of myths has arisen and needs to be dispelled ASAP. E-Sourcing is NOT an excuse to:

  • turn every Procurement event into a(n) (e-)Sourcing Event: just because you can, doesn’t mean you should … most procurements should be off existing contracts, most tail-spend should be spot-buys, and when the volume/cost is enough, simple RFQs; e-Sourcing is for goods and services that are strategic or custom, not tactical or commoditized
  • use AI to draft RFPs: with AI, you can draft RFPs, and incorporate as much as you want into those RFPs, and ask as many questions about as many things as you want — this might make your life easier, but it unfairly burdens suppliers when you ask for details you don’t need (at least until you are going to seriously consider them) — plus, AI will hallucinate, ask wrong questions (and then force a follow-up request later when it’s discovered) and waste time on both sides … RFPs need to be human drafted — they should be based on templates (and assembled using non-LLM AIs), and AI should be used to judge completeness, clarity, etc — and even recommend gaps to fill in (because, when well trained, 90% accuracy can be useful), but AI should never lead
  • use AI to conduct events agentically: AI should be used to automate the tactical, but humans need to be engaged at every decision point
  • use the same process for every event: some events should be simple one-shot mini-RFPs just to verify key product/service requirements; some events should be moderate two-stage RFI/RFPs to ensure the suppliers meet mandatory organizational requirements; others deep three-stage RFI/RFP/RFQ processes to first verify suppliers, than products and services, then BAFO pricing so complete information is known before a decision is made

e-Sourcing is about right-sized efficient execution of strategic sourcing events for both sides, nothing more, nothing less.

Supply Chain Security Is Becoming More Important By The Day: Part II

Yesterday we reminded you of the benefits of supply chain security, and then noted good supply chain security has gone from a nice to have to an absolute must have.

In fact, your entire supply chain now needs to be designed with security in mind as well as risk. It’s not just lowest cost and availability of supply any more. It doesn’t matter if the supplier is lowest cost, highest quality, able to produce more than you need in the best market conditions, and guaranteed component and material supply from local distributors and mines if you can’t get the products from their factory halfway around the world to your local warehouse.

In other words, you can’t choose a supplier:

  • in a sanctioned country
  • if the only shipping routes include war zones

… without a backup (for when something inevitably goes wrong):

  • where there are active trade wars between their country and your HQ or target country
  • where the majority of shipping lanes are currently high risk (of disaster, piracy, and/or theft)
  • where the government is pursuing an isolationist agenda that could significantly impact exports
  • where the available transportation companies don’t have good security measures

Then, once you select that supplier, you need to focus on ensuring you have end-to-end security. This involves ensuring that:

  • you use suppliers with good plant security
  • … who use carriers with good security
  • … and sub-tier suppliers with good plant/mine/farm security
  • you have (near) real time GPS (cell/satelite) tracking on every vehicle
  • you have RFID tracking on every pallet
  • you ship food and drink in tamper proof packaging
  • you ship electronics or dangerous products in tamper aware packaging
  • you have documented chain of custody for every pallet from supplier factory to your warehouse
  • you have physical security for valuable goods (and especially those that are hot targets, like truckloads of iPhones)
  • … this includes the use of ocean freight carriers, that spend a lot of time in international waters, that have their own private security force to deter piracy / terrorism

Otherwise, you’ll have an insecure supply chain and it’s just a matter of time before you get blocked, seized, pirated, terrorized, or sunk.