In the current climate, managing your supply chain, and the risks involved, is absolutely critical to your organization’s financial health and competitive performance. As we are seeing, the negative impact of global events on an organization’s financial position or reputation is potentially huge, even devastating.
The trend of focusing on globalization has never been more apparent, and it is highly effective when things are going well. However, there are times when moving to more local suppliers – and getting them onboard as soon as possible – is essential.
Global trade has become increasingly difficult recently, with the Coronavirus putting immense strain on procurement departments and supply chains. In the US, ports are bracing themselves for cargo volumes to drop by 20% or more in the first quarter of 2020, according to the Financial Times
. The effects are also being felt across sectors, with Quartz suggesting that the situation is throwing fashion’s supply chain into disarray
. It is highly possible that many goods that are sourced from China, disposable cutlery, gloves, storage containers, wraps and bags, will become unavailable.
In times such as these, focus is crucial. Be clear on the management objectives from the outset. It may seem obvious but stop spending and doing things you don’t need to do, and focus on selecting suppliers that pose the least risk and, where necessary, have alternative suppliers vetted and ready to go.
Even in challenging times, effectively defining your buying need and selecting the right supplier is critical for an organization that wants to minimize risk and ensure a smooth continuation of supply – whether it's for a one-time capital equipment purchase or service contract, or for ongoing supply of frequently used goods or services. You may even decide that, given resource limitations, outsourcing key functions
that reduce the level of complexity within the core business may be the best route forward.
Looking to build up your local supply chain, so that you are not relying on goods and services from other parts of the world, could be key. There are a number of solutions and partners available to help you find the “right” suppliers – even at a local level. Companies such as Proactis provide the tools needed for more local business transactions and communication with suppliers, to make transactions faster, easier and more efficient for both you and your suppliers. Setting up new suppliers is quick and easy, with intuitive designs
and user experience to ensure that both staff and suppliers are comfortable using it.
Current “high-risk” suppliers also need to be carefully analyzed. Can the supplier guarantee that it can continue to supply the goods and services you need? What is the risk to you if the supplier “disappears” overnight? While these will depend upon several factors it is a timely consideration.
Minimizing the effects of the current situations and challenges to the supply chains will largely depend on the processes that businesses put in place. While “business as usual” may seem a long shot, it’s certainly not impossible with the right planning and support.