Building resilient supply chains

With the speed of the coronavirus vaccine rollout and gradual lifting of lockdown restrictions in the UK comes the inevitable talk of “getting back to normal”. For organisations, many of whom will have spent the past year focused on survival – on stabilising their finances while ensuring minimal impact on delivery – it is finally time to look to the future.

Because, if the pandemic has taught us anything, it is that procurement organisations must look forwards, and not backwards. We cannot just go back to business as usual. Yes, we need to take time to regroup and to understand the lessons we have learned over the past year or so, but then we must redefine the roadmap and begin the journey towards a new normal.

Why is this? Well, the coronavirus pandemic might have been extraordinary in the way in which it has disrupted the lives and livelihoods of people the world over, but research shows that extraordinary events are happening more and more often, albeit usually having less all-encompassing reach.

And so, “back to normal” cannot be an option. To guard against future disruption and uncertainty, now – more than ever – it’s time to build supply chains that are truly future-proof.

Procuring for resilience

We live in an increasingly interconnected world. Supply chains are becoming longer and more complex, with individual members more reliant on each other than ever before.

Natural disasters, extreme weather events, trade disputes, cyber-attacks, geopolitical uncertainty – these can all cause disruptions that can ripple through these increasingly interdependent supply chains. Short-term, minor disturbances may be withstood without noticeable impact, but – without concerted action to mitigate their effect – longer-lasting or more severe events will inevitably impact delivery.

Research shows these kinds of disruptions are happening more and more often, and are likely to continue to do so. Plus, there is always the possibility of another coronavirus…

And so, procuring for resilience is becoming increasingly important.

The need for visibility

Unfortunately, what the coronavirus pandemic has highlighted, is that some procurement organisations may not have the full visibility they need of their supply chain to understand whether they are resilient and where their risks may lie. They might know their tier 1 and even tier 2 suppliers well, but this transparency may not extend end-to-end throughout their full pipeline of supply.

In the past, organisations might have been able to get by with this lack of knowledge, or indeed with known vulnerabilities, but this is no longer the case. As we transition out of the pandemic and Government financial support for businesses is withdrawn, we will begin to see the true picture of financial health, and it will become more important than ever for organisations to mitigate their risks in this area.

Where do I start? Building resilience into supply chains

As with everything – it seems – about moving past the coronavirus pandemic, building resilient supply chains begins with an element of starting over.

We are in a different world now than we were 18 months ago. Procurement organisations may find their customers – whether internal or external – need different things now than they did before. It will become necessary for procurement to help redefine what it is that needs to be delivered, how that can be done, and therefore what is needed from suppliers.

The thought of starting over may be daunting, but it also comes with opportunities – a chance for a fresh start, to do things differently, to build in more innovation, better sustainability, or both.

At eXceeding, building resilience into organisations’ delivery is part and parcel of what we do. For those not sure of where to start, we’ve put together our top tips for building a pipeline of supply that’s fit for the future.

A supply chain that’s fit for the future: tips for getting started

1. Go back to basics. There has been much talk about how the pandemic has expedited the evolution of both customers’ and organisations’ buying habits. With this comes a need to stop and take stock of what the business needs now and what customers need, what has changed during the pandemic and to what extent we have adapted to that, and how we can build all of that into a new operating model. Questions organisations might ask themselves include, if we are going to be working from home now, do we need to have a fixed office and all the supply chain that sits around that? And, if our customers are used to buying online, do we still need to have retail units and all the infrastructure and supply chain that surrounds those?
2. Start with a clean sheet. The idea of zero-based budgeting – of putting aside last year’s budget and starting afresh – may be beneficial to organisations as they seek to transition out of former ways of operating and into new ones, as it allows them to really think about what it is they need, without any constraints tying them to the past.
3. Revisit existing relationships. Inevitably, organisations will have existing contracts and relationships with suppliers which make starting completely from scratch impossible. But it is important to realise that this time represents a fresh start and a new beginning for all of us. Your suppliers will be going through a similar process of readjustment to you, and having similar conversations about doing things differently, so now is actually the opportune moment to speak to existing suppliers about how the world has changed, how your organisation has changed, how theirs has, and how – together – you can do things differently going forwards, for example bringing in more innovation, embedding sustainable practices, or increasing efficiency through automation.
4. Add competition. The pandemic has highlighted the risk of having all your eggs in one basket – of single-sourcing with a key supplier. Moving forwards, organisations would do well to take advantage of the opportunity to diversify their supply by adding competition in the form of a framework. If one supplier is unable to service your needs, you have several other pre-vetted suppliers ready and waiting to do the job. As well as avoiding that single point of failure, the competitive nature of frameworks can help increase innovation and improve value for money.
5. Build partnerships. There has been much talk about ‘procuring for resilience rather than cost’ and the debate about whether businesses should be reshoring their offshore operations continues but, rather than making sweeping changes, we believe long-term resilience is about working in collaboration. The coronavirus pandemic has highlighted how dependent members of supply chains are on each other, and the importance of working in partnership to keep everything running smoothly. The organisations that succeed long-term are going to be those that work with and innovate alongside their supply chain partners. Getting to know your suppliers’ strengths and weaknesses enables organisations to look beyond the reported numbers and determine for themselves where they may be over-geared and therefore financially vulnerable, or alternatively where they may be opportunities to work together more closely, for example to improve sustainability and increase innovation.
6. Stay informed. Developing a closer relationship with suppliers will help organisations to get the management information they need to evaluate areas of risk and plan for potential disruptions, but it’s important to know and understand exactly what information is needed to mitigate potential risks, and ensure suppliers understand what reporting they need to be doing. Organisations can ensure they stay on the front foot by using automation technology to enable live feed snapshots to be taken at any time, as well as registering for third-party updates.

How eXceeding can help

We are committed to helping procurement professionals navigate this time of transition and prepare for whatever the future holds, by providing the targeted knowledge and expertise required to get to the heart of what organisations need to do to become more resilient, the capacity to implement that learning, and a practical roadmap detailing a step-by-step approach to enable them to do that.

• Risk Assessment – Our experts help organisations discover and understand where the risks lie within their supply chain, as well as plan for how these risks might be mitigated.
• Demand collation – At a strategic level, we support procurement to have the necessary conversations with internal stakeholders to determine what has changed in a business’s pipeline or needs, and how that impacts what will be required from suppliers going forwards.
• Supplier diversity – Our tendering experts help organisations to diversify their current pool of suppliers, advising on framework set-up and conducting market engagement.
• Supplier relationship management – We support teams to evaluate their suppliers and redefine how they work with them going forwards to ensure full visibility and transparency, and the implementation of lessons learned from operating during the pandemic.
• Upskilling – Where new or improved skills are needed within a team, we can help to develop those through upskilling existing team members or bringing in new resource to support.

For more information on how we can help your business get fit for the future, you can contact us here or book a free appointment using the link below.