Supply Chain Management

Those of you with formal Business Continuity Plans, or those working in sectors where supply chain management is critical, should already be prepared to ensure you’re guaranteed the materials or services required to continue to operate.

However, the Covid-19 pandemic has the potential to introduce increased supply chain risk into all sectors, particularly those that may never have seriously thought about it previously.

Here we look at some of the supply chain considerations that businesses should be looking at. These will apply to those that are continuing to operate as normally as possible, those that have shut the doors but have staff working remotely, and also to those businesses that have effectively stopped operating for the time being.

Know your critical suppliers

Take the time now to work out who your critical suppliers are. Who does your business rely on?

  • If these suppliers go out of business, or cannot provide you with what you need, how long can you continue to operate for?
  • How long will your inventory stocks allow you to continue for?
  • Do your suppliers have Business Continuity Plans in place? Can they ensure continuity of supplies through the pandemic?
  • If your suppliers have had to shut their operations, what plans do they have to recover and restart production? Will there be a lead time that will affect your recovery / ongoing operations?
  • Are there alternative suppliers in the market? If there are, can they provide the quantities you require, is their product of suitable quality, and is their product price right? Are they the sort of businesses you want to engage with? How robust are they?
Supplier relationships

In general, successful relationships require good two-way communication.

If your business isn’t currently operating, stay in contact with your previous suppliers. Let them know why you’ve had to close, what your business plans are, and that you’ll need them when things go back to normal. Remember that whilst they’re important to you, you may also be important to them!

It would be beneficial to find out what they’re doing as a business. Have they had to close their operations, or have they found alternative customers? They may have taken the chance to diversify and found an alternative sector to supply to.

Ultimately, will your current supplier be there for you when you’re trying to recover your business? If not, you may need to try and find an alternative supplier – and this is better done before operations restart, rather than once they’ve restarted.

You may find that now your supplier has found alternative customers, there are reduced or no supplies available to your business, or there’s the potential for significant price increases.

You may want to have conversations now with your suppliers about pricing during the recovery phase, when there may be a lot of businesses getting back onto their feet, with limited supplies available.

Increased demand + limited supply = Increased price

Similarly, during these discussions you may want to look at securing levels of supply when you’re recovering the business. You’ll need to anticipate how quickly the business may recover and what stock levels you may require.

If you’re lucky enough to still be operating, maintaining good communication is key. Let your suppliers know what your business plans are, reassure them that they’ll still have you as a customer now and when things go back to normal. If you think you’ll need to reduce your purchases, communicate this in plenty of time to your supplier so they have the ability to manage their production.

Opportunities

Whist the main focus is likely to be on the maintenance of relationships with suppliers, the pandemic may offer others a potential opportunity to look at those areas of the supply chain they are less happy with.

There may be suppliers whose performance has been questionable, their product quality variable, or with pricing not as competitive as desired.

Does this downtime allow you to explore the market in more detail than you might normally do? Can new relationships start to be built that may offer alternative supply sources in the future?

Summary

The Covid-19 pandemic poses both supply chain risks and opportunities for the majority of businesses, whether they’re continuing to operate or have had to close their operations.

Being prepared, pro-active, and having plans in place to ensure that your business has suitable supply chains in place will increase the chances of a successful business recovery and may allow you to seize other opportunities when the economy starts to grow.

Fail to Plan = Plan to Fail