The COVID-19 global pandemic is highlighting the fact that many of our systems are broken. When a natural disaster or a disease threatens security of supply, we realise very quickly the importance of supplier management, and supply chain transparency and of the risk exposure if supplier transparency is inadequate. Because of its’ supplier oversight, the procurement and supply chain organisation is best positioned to help an organisation balance its risk management, growth, profitability and social goals as it strives to address business continuity issues and also shift to achieve sustainable business in the long term.
COVID-19 does indeed have potential to wreak havoc on global supply chains. We are yet to see exactly what that may look like as industries with long lead times and high inventory levels in some industries may take months for the gap in supply to hit the shelves.
Transparency is the key
As we offshored and outsourced our manufacturing and sourcing of materials in the last two or three decades, the supply chain became more and more opaque. As the visibility of the members of our supply chain decreases, risk exposure increases.
There are a myriad of reasons why you would want to map a supply chain, tracing risk associated with reduced supplier productivity due to COVID-19 is just one of those reasons. It is also imperative to put measures in place to map supply chains to identify and mitigate environmental and social sustainability risks, such as forced and child labour.
This is especially important during this time as workers in less protected and low-paid jobs are especially vulnerable to the pandemic. The pressure to find employment at any cost can compel those in need to accept whatever work they can find, sometimes with unacceptable working conditions. We can’t put proactive measures in place if we don’t know who is in our extended supply chain network, so transparency is a must.
Being a customer of choice
In times of crisis, the power balance between buyer and supplier shifts dramatically as some resources become scarce. Our annual research shows that being a customer of choice positions an enterprise to receive preferential treatment from key suppliers. Leaders in supplier management report that they achieve up to 4% additional financial benefits from being a customer of choice, and are twice as likely to receive supplier innovation and ‘the A team’.
State of Flux defines a customer of choice as an organisation that consistently, through behaviours and actions, positions itself to receive preferential access to supplier resources. This is done by focusing on attitudes and behaviours most important to suppliers, such as being a trusting and long term partner rather that short term focused and transactional.
Have you participated in this years 2020 supplier management survey?
Survey: Supplier management at speed
Take part here
Focus on technology
Fortunately, new supply chain technologies are emerging that dramatically improve visibility across end to end supply chain, and support companies’ ability to identify and mitigate against shocks such as COVID19. Supplier management systems and technology have helped supply chain professionals move beyond mailing spreadsheets between stakeholders and suppliers. Technology underpins good quality supplier engagement, to be able to monitor performance metrics in real time dashboards and have access to the same information. Most platforms also integrate with third party risk information providers to monitor supply chain, regulatory and cyber risks.
Now is the time to put focus on supply chains and investing in supplier management. We can use this crisis to become more focused, proactive, and collaborative in managing risk and performance with suppliers, and their suppliers in the extended supply chain.
During this time, we are here to support you. State of Flux is offering online supplier management training at a reduced price, and free use of our supplier management technology for 3 months. We have also adapted our SRM fundamentals training to be entirely delivered online through an interactive learning modules