S is for Suppliers


Copyright © 2018 by Barney Rosenberg
President, Ethics Line, LLC™

Most businesses rely on a network of sub-contractors for the materials and components that go into their final products.  That network is often referred to as the supply chain.

Years ago, on a long flight in a very large commercial jetliner, I found myself sitting next to an executive of the Boeing Company that called the 747 jetliner its own.  The company I worked for at the time was a major supplier to Boeing and the conversation naturally turned to commercial aviation.  At one point in the discussion, I asked him how he liked this Northrop plane.  He said innocently enough “You mean Boeing plane.”  I said “Well actually, Northrop makes the fuselage from the cockpit back to the tail.  So which part is Boeing?”  We both laughed.  At the time, Boeing had 3000 suppliers for the 747!  That’s a very long supply chain.

In the aerospace world, highly sophisticated components, sub-components and raw materials go into the final product.  They arrive at various stages of the manufacturing process, in various cities, countries and continents.  I recently had the dazzling experience of a personal tour of the Airbus A380 final assembly plant in Toulouse, France.  The plane is a massive industrial behemoth that in flight is quiet, comfortable and big enough to hold the equivalent of the population of a small village!  I am 6 feet tall and can stand up inside the wing of an A380.  The wings are floated on barges from Germany to France to be attached to the body of the plane.

No matter how critical the components (and in some cases they are sole source, because nobody else can make them!) suppliers often feel like “second class citizens” because their name does not appear anywhere that passengers can see them…except for the engines, which is another story entirely.

But the same can be said for automobile manufactures.  They don’t make the windshield wipers, wheels and brakes, or the electronics that power everything that moves inside the car.  Food companies rely on spice growers, farmers around the world, and even scent manufacturers.  Packaging manufacturers protect the products until they get to us, the consumers. You get the point.  And it’s even more complicated.  While companies compete in the marketplace, if a prime contractor loses a bid, that contractor may become a supplier to the winning bidder.  So one day you are the prime.  The next day you are the sub.  And various “teaming” arrangements are the norm.

You may quote me on this: Everybody’s somebody’s supply chain!

At a recent trade association meeting of aerospace companies, I was invited to give a talk to the major prime contractors that ran the association.  My topic was the supply chain.  My company was a supplier to all of them.

The sense of the supply chain was (and still is?) that suppliers were necessary evils, but evil nonetheless.  Example: most companies have robust ethics programs, codes of conduct, and related policies and enforcement mechanisms.  The prime contractors, through their supply chain and contracts managers, were forever insisting that the subcontractors agree to all of the elements of the prime contractor’s ethics program.  In the case of my company, and we were certainly not alone, that would mean hundreds of conflicting codes and policies.  How in the world, literally, could we be expected to train our workforce?  And any slight variance could mean termination of the contract for cause.  And by the way, all of the companies in the room at the association meeting had subscribed to the identical statement of ethical standards.  That was a pre-condition to membership in the association and attendance at the meeting.

So what did I do?  I began my talk with a song.  I can’t carry a tune but Aretha Franklin sure can.  And she has a fabulous song for this audience.  It’s called “Chain of Fools”.  One stanza goes like this:

One of these mornings

The chain is gonna break

But up until the day

I’m gonna take all I can take

Then I asked the audience:  “Is this what you are afraid of and is this why you treat your suppliers this way?”

We agreed then and there that as long as we were members of the association in good standing then we could rely on our own ethics standards…and they could rely on us!  It’s still a work in progress because the contracts managers and supply chain managers haven’t always gotten the message and they have their own set of boxes to check.

But I will finish for now with the observation that when it comes to business ethics, the old maxim may serve us well.  Trust but verify!



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