Your inventory is dwindling. Some of your core suppliers are in vulnerable zones. You’re paying twice as much to procure the required materials. Your cash reserves are low.
As the COVID-19 pandemic continues to impact business activities across the world, procurement and supply chain leaders are looking for cost-effective ways to prevent further disruptions. The latest bulletin from GEP, Securing Supplies: A Rapid Action Plan to Maintain Supply Continuity, recommends a four-step plan that companies can execute immediately to manage their supply chains.
What’s Inside:
- Identifying and assessing your supply chain risks
- Sourcing, contracting and cost-optimization solutions
- The best way to implement the plan: a focused team and external experts
A must-read for supply chain leaders who need quick solutions to the supply chain risks their companies are facing.
The real impact of the COVID-19 crisis and its resultant lockdowns on supply chains is only about to be felt.
While there have been supply chain disruptions as a result of the shutdown in China since the beginning of 2020, many organizations have had inventory to see them through, and as demand tapered, their stocks have lasted longer. Others have taken tactical decisions to ensure supply continuity that have led to much higher costs — as much as two to three times because of air imports, despite the drop in commodity prices.
However, the coronavirus outbreak has not yet been contained, and the crisis has acquired global proportions — country lockdowns, quarantine and movement restrictions mean that the situation is not going to get back to normal anytime soon.
Meanwhile, the inventory is dwindling.
Given the situation, business leaders will be grappling with the following questions:
- How do we minimize supply chain disruptions in today’s context?
- What should be our approach in relation to strategic, preferred and tactical suppliers to ensure supply chain continuity?
- What should our contracting strategy be in the near term? How should we realign existing contracts?
- How can we accelerate cost optimization in the near term to offset losses on account of the disruption?
To address these concerns, GEP proposes a four-step rapid action plan founded on our assessment of supply chain vulnerabilities.
RAPID SUPPLY CHAIN ASSESSMENT
The purpose of rapid supply chain risk assessment is to assess the impact on the operational supply chain of clients focused on preventing further supply chain disruptions.
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RAPID SOURCING
The aim here is to discover alternative suppliers, get a fresh perspective on rates and urgently onboard vendors for categories that can compromise supply chain continuity.
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RAPID CONTRACT REDEFINITION
The objective is to assess the contracts at risk and work on re-scoping supplies of lower-tier suppliers (of Tier 1 suppliers) to mitigate the challenges they face in ensuring supply chain continuity.
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RAPID COST OPTIMIZATION
This exercise is directed toward finding cost-takeout opportunities in the near term, where execution is not bogged down by long, elaborate approval processes.
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FORM A RAPID TEAM
To implement the four-step plan, companies must form a rapid action team represented by relevant internal stakeholders and focused on managing the supply chain. This team would work collaboratively and continuously — with each other and with external experts — thus providing feedback to all sections involved in making this initiative a success.
RAPID RESPONSE SOLUTIONS FROM GEP
As the coronavirus crisis intensifies, managing your supply chain is going to get even more challenging. It may be worth finding a partner with deep experience in procurement and supply chain management to reinforce your capabilities and help you stay on course.
If you would like to have a conversation about how we can help, please reach out to our supply chain leadership.
Ajay Tiwari
Senior Director
Ajay brings over 17 years of consulting experience focused on procurement and supply chain transformation, including strategic sourcing, supply chain risk assessment, network structure, planning, organization design and technology assessment. He has rich experience in automotive, CPG and process industries.