Supply Chain Disruption: Reducing Risk in an Unpredictable Environment
13 October 2022 |
The C2FO Team
How are procurement teams dealing with so many unknown unknowns?
Supply chain professionals are used to preparing for (and in a perfect world, preventing) threats to the swift, orderly delivery of inventory. That’s just in the job description. But the last few years have presented an unprecedented level of challenges.
A global pandemic, runaway inflation, monthslong shipping delays — how are procurement teams dealing with so many unexpected, unpredictable problems?
That was the heart of a session at this year’s ProcureCon Europe in Barcelona, Spain. Hosted by C2FO’s Mirco Roeben, experts from UCB, Sanofi, Bridgestone and other corporates shared some of the strategies they’ve employed to strengthen their supply chains in a period of uncertainty.
“I had the privilege to speak to supply chain professionals from some of the world’s most successful companies,” Roeben said. “It was fantastic to learn how the best of the best are responding to all these disruptions.”
Among the recommendations from the roundtable:
Create an end-to-end view of your supply chain. A new generation of software solutions gives procurement teams the ability to track shipments at each stage of the supply chain, so they can spot and respond to delays or shortages quickly. Some of these solutions can even flag potential threats related to weather, global conflicts and other external factors.
Build up “safety stocks” for mission-critical products. The idea of “just-in-time delivery” isn’t completely dead, but many of the panelists were hedging their bets against shipping delays by increasing their inventory on hand for merchandise they absolutely, positively have to have.
Shine a spotlight on what you do have. Procurement teams are letting their sales teams know which products they can easily source, so they can give a greater promotional push to those items.
Find alternatives for the essentials. Some panelists have created segments of items and products they have to have on hand. By identifying those critical goods, they know where to focus their energies, whether that means finding another supplier or finding a similar item that’s close enough to work.
Reconsider “near-shoring.” Global supply chains have delivered considerable cost savings over the years, but recent delays in shipping — months in some cases — have more procurement teams looking at manufacturers that are in-country.
Communicate more with core suppliers. It isn’t always possible to prevent a shortage, but regular communication — weekly, if possible — can give you more warning to adapt to potential shortages.
Practice radical transparency with suppliers and competitors. “I was amazed to learn that many companies and suppliers have developed a weekly triage priority call with other competitors to manage delivery of mission critical items in a fair and transparent manner,” Roeben said.
ESG is unfortunately on the back burner. It’s important, but so many teams are so busy, they don’t have the time or resources to focus on these programmes.
“Everyone seems to be in survival mode, and companies, suppliers and competitors alike are working closer together than ever before,” Roeben said. “Transparency and predictability of supply are the key objectives everyone is trying to solve.”