What Can You Do As a Minnow in a 20,000 Kilometre Supply Chain?

Fire and Emergency New Zealand, which Kiwis know as FENZ, imports over 90% of its safety-critical response equipment from the Northern Hemisphere. That means we source the likes of the “jaws of life” for road rescue, fire hoses, medical response gear and portable pumps from generally large-scale original equipment manufacturers, or OEMs, who operate in much bigger markets and have only agents or resellers DownUnder. We don’t hold inventory or buffer stocks. Our supply and distribution chains stretch more than 20,000 kilometres (12,000 miles) over the Seven Seas, and specifically cross sea lanes buffeted by whatever is the local geopolitical instability du jour. Recent attacks by Yemen’s Houthi rebels on the Bab al-Mandab Strait that bottlenecks the Red Sea are but one example.

FENZ also suffers ripple effects common to many manufacturing supply chains, like raw material input supply issues and cost escalations rippling out from the diversion of critical metals and fabrics to Ukraine. Plus, our demand for crucial equipment is hard to forecast and subject to long order-ship (lead) times and special management (e.g., regular tests, certifications or specific functional checks), while the equipment itself is limited to one function or task set.

In the equipment and logistics supply and distribution chain space, FENZ typically has 60 live contracts, around 10 procurements underway, three significant and strategic Tier 1 relationships and seven Tier 2 relationships. We are price and distribution takers. In short, we are a minnow swimming in a very large pond, or small fry in an ocean. Yet the price of failure for this minnow could not be greater: equipment failure on a fire or an incident ground spells catastrophe for an individual or a community.

COVID-19 brought all our problems graphically to a head. Supply of raw materials was disrupted. “Ghost” ships to New Zealand sailed with skeleton staff and no passengers. Air freight costs made the eyes water – especially since all our equipment is heavy, bulky or both. OEMs slashed inventory and reverted to make-to-order rather than make-to-stock.

So, how have we weathered already-choppy conditions that had spun during the pandemic into this seemingly perfect supply and distribution storm?

Shocks from the pandemic were actually useful: they forced us back to basics. Starting in 2021, we adapted our strategy in several ways:

• We engaged our suppliers and their agents with a “from factory to fireground” philosophy. That means treating supply partners as genuine partners, albeit not always equal, and concentrating on building relationships rather than managing contracts.
• We assembled equipment capability category panels to boost resilience and spread risks. Panels marked a departure from the old winner-takes-all procurement process, whereby FENZ had been having to pivot every three to five years in a series of exclusive friendships with the latest winning suppliers for each capability category.
• We shared our five-year equipment spend forecasts with suppliers and asked them what was the best time in their production cycle for us to piggyback an order on a larger production run for other jurisdictions.
• We created our own Supplier Relationship Management (SRM) framework for the fire and emergency setting. Its founding principles as applied to that setting are:
  •     Communication: the free and frank exchange of information, knowledge, ideas, or skills to inform, educate, imagine, influence, express feelings or meet expectations.
  • Collaboration: suppliers working with each other and/or customers towards a defined, mutually beneficial business, operational or commercial outcome.
  • Coopetition: a mixture of cooperation and collaboration between competing suppliers, namely those who offer the same or similar products or service lines or operate in the same or similar markets, by way of alliances and agreements to, once again, both help each other and benefit customers. Coopetition in a fire and emergency SRM enhances mutual gains.
• We started running annual Supplier Weeks. On Day 1 we make clear we’re partners, discussing issues of mutual interest. Then we go and visit our New Zealand supplier partners at their place for a coffee and a “walk ‘n’ talk” so we can understand each other’s drivers and nurture a more informed relationship.
• Last but not least, we injected some fun and laughter to assuage our supply and distribution chain woes. Laughing at ourselves and each other can be just what the doctor ordered. Let’s face it: as a colleague diagnosed our situation recently with grim humour, “it really sucks to be a logistician in this day and age”.

So, there you have it, folks. I’m not for a moment suggesting these little initiatives will work for everyone or for every supply chain, but they’ve certainly helped us get through some pretty tumultuous times. And the tumult ain’t going to change any time soon.

Tiaki koe – keep safe.

Charlie Lott is the National Manager of Equipment and Logistics at Fire and Emergency NZ.

charlie.lott@fireandemergency.nz