In the midst of the COVID-19 crisis, the importance of having an effective procurement strategy has never been greater, with sales forecasts falling off a cliff in many circumstances.
Supply chain professionals will undoubtedly be faced with minimising the impact of any disruptions.
In an effort to support teams navigating heavy workloads, here are some tips to consider from Team Dojo, to help companies navigate this crisis.
Streamline internal and external Communication
- Communicate regularly through virtual meetings and interactions and appoint one point of contact to liaise regularly with suppliers to ensure that they have an open line of communication.
- Assign an emergency management centre point of contact, which will act as a central hub in any time of crisis.
- Use a centralised area to record communication with your internal team as well as your suppliers and clients.
- If you have limited access to phone lines, amend voicemail messages to explain your company’s situation, and if possible include extension numbers and Direct Dial-In numbers to help callers navigate to the correct point of contact or department.
Reduce immediate costs – Examine immediate upcoming payments
- Look at the immediate payment schedules coming up
- Organise these payments into suitable categories related to the service such as
- Critical service
- Like to keep
- Not needed
- Then devise a strategy for each one from
- Pay as normal
- Ask for delayed payment or change service levels.
- Hold payment
- Cancel payment
Reduce future costs 2 -Spend analysis and organise current supplier base
- Essentially the same as above but now examine goods/ services that will create future invoices which are not currently on your systems.
- Using the pareto rule on spend analysis will help as well as examining all your contracts.
- Some decisions will be easy such as the need for cleaning services in the office or coffee or advertising. Obviously the impact on the supplier is greater although this is where the government support system should help.
- Other suppliers will be more challenging and you are looking for a win-win.
- In some cases you will just have to accept the service is not critical and then the business will have to accept the future impact.
- However, some suppliers are taking advantage of these times to hike prices. You always have options here and we are seeing where this happens, there is a tendency to meet then equally on the eAuction playing field.
- As with both these sections, remember to prioritise activities that are essential to the safety of your staff and ensure they have the ability to continue their work. This may involve anything from buying laptops to prioritising protective equipment.
Risk analysis – Map out supply chain
- Map out your supply chain especially strategic critical supply paths. In other words what suppliers are critical to the business functioning and within those chains what is the critical path
- For the critical suppliers, you will need to engage with them immediately to understand how much risk you may be under. This can be done for free using our Covid-19 RFI template.
- Information is key here. You really need to understand what level of information is needed for different types of suppliers. For key suppliers, you will not just need to understand their current financial position but potentially stock levels and that of their supply chain. For less critical suppliers, higher-level information would suffice.
Risk mitigation & Disaster recovery plan
- Following on from above, it would be wise to start taking the next step and plan for multiple different scenarios and develop options.
- For critical suppliers that are at risk, this could range from simply asking what you can do to help, to ensuring they are paid on time through to looking at innovation or other sources of supply
- For non-critical suppliers at risk, you may just need to look to delay their goods or services or even cancel.
- Remember to not just look at the present but well into the future. There are many unknowns in this crisis.
- Having said the above, obviously, this is all a discussion. It is important to treat your supply chain with respect as you will need them when times recover. However, the advice above is simply to ensure you have a business that will stay in business. It is no use to anyone if it fails.
Keep up to date
- Assign an individual to manage and monitor the ever-changing information flow to the right people.
- For critical supply paths, keep on top of how those supply chains are being affected.
- Understand how the government is offering support as this will feed into what actions you may apply against different suppliers.
- Perhaps assign someone in the team to filter the information flow to the right people.
Collaborate with your suppliers to reduce risk
- Be innovative. Currently, procurement is being pulled in so many different directions and you will not have the time to do everything above. Use your suppliers knowledge. It is just as important to them as to you.
- Collaborate with your supply chain to identify any areas of innovation that could help production, such as identifying material substitutes or alternative freight plans.
Formulate specific tasks within the procurement team
- Much of the day to day workload will disappear and be replaced with very focused activities.
- Ensure that all your team members have clearly defined roles and categories to manage, to avoid missing any potential developments.
See our infographic here.
For more information on how Market Dojo can help your business, please get in touch with our support team today. If you are looking to run a free Covid-19 RFI please use this link to learn more.