Supply chains are in shock. Materials are stuck at borders. Outsourced services are shut down.
With revenues falling, companies are managing in unprecedented global chaos.
Leaders must align and navigate their procurement and supply chains right now.
Our latest blueprint for CV-19 contingency and cost containment is a detailed 6-point checklist that will help you capture all your risk and help isolate your recovery plan.
With 20 years of procurement and supply chain experience, GEP is uniquely positioned to help build targeted downturn and managed services strategies quickly and effectively.
Covid-19 has transformed from a short-term hiccup to a perfect storm at an unprecedented pace. It is normal to feel disoriented and to feel like you’re running in eight directions at once. The reality looks something like these two hypothetical but plausible scenarios:
A U.S.-based industrial manufacturer thinks that they are insulated from the impact to global supply networks. However, some of their raw materials come from Mexico and Canada where the borders are now closed. State and local regulations may impose closures on manufacturing sites. The government can also invoke the Defense Production Act to alter production in certain industries. The situation requires contingency plans be put into place quickly.
An E.U.-based services organization thinks that they are insulated because all of their personnel can work from home and they have no physical supply chain. However, their accounts payable function is outsourced to Asia and that provider is not set up to handle work-from-home for its employees – and AP work comes to a complete halt. As suppliers stop receiving payments, crucial outsourced services and technology will get interrupted resulting in major business disruption. This situation requires a contingency AP plan.
These scenarios are becoming the norm right now. Leaders who pull themselves together and align their organization to a well thought out plan to navigate through this storm will come out of it the strongest.
Here is GEP’s blueprint. While you may have thought through some of these items, this information can be used as a checklist to help organize your thoughts and capture all of your risk, contingency and recovery plans.
Identify potential disruptions and assess risks across all departments in parallel.
Preserve resources – personnel, technology and cash.
Set up appropriate lead indicators correctly.
Let’s admit that none of us could really see this coming, and even when we did, we could not gauge the enormity of the impact. Currently, we are in a ‘fog of war’ with our indicators being news media and department briefings. This creates a risk that we may miss the recovery points as badly as we missed the downturn. The quicker we codify the inputs needed into data sources, the more clearly we can navigate through the evolving situation and take advantage of any recovery. These lead indicators should feed into a “manual control tower” which can eventually be replaced by technology solutions.
Suggested indicators are:
Quick solutions for quickly emerging problems.
The normal command-and-control hierarchy, especially in large corporations, will not be nimble enough to navigate this storm. An alternate mechanism is needed. You need to focus people and resources.
Monitor the lead indicators closely and keep going until they point to a recovery.
Manufacturing needs to restart before the recovery actually hits the market in the form of demand. In the meantime, you should conduct and/or use:
Ride the recovery wave effectively by leveraging what you’ve learned.
If the above measures were put in place correctly, a portion of the cash war chest will remain unutilized. This should be spent judiciously to ensure a market-beating recovery. One use for this ‘war chest’ should be on acquisition of:
But there’s more to the recovery than assets alone. You’ll have to make the best use of what you have as well.