In this time of uncertainty, we are offering the module that can help employees and companies continue to move forward.
The COVID-19 pandemic has disrupted every industry in terms of disruptions caused by lockdowns, border closings, and travel bans. The three immediate steps, supply chain visibility, optimize capacity and demand prioritization can mitigate risk and give relief to supply chain leaders. Supply chain leaders need to know the flow of material and geography of each location since some of the suppliers may not extend their service beyond certain point or period. It is also important to know the inventory at each plant, supplier and supplier’s supplier if possible. After identifying the vulnerable areas it is important to draw alternate plans either with the existing supply base or establish new supply base.
The availability of logistics providers is a challenge and organizations continue to monitor the availability of transportation providers internally and as well those of suppliers and sub-contractors. The current crisis is wreaking havoc with container shipping and air cargo and now is spreading to domestic trucking. To safeguard themselves against such disruptions and risks, companies either need to have suppliers closer to their production locations and markets where products are consumed, or they need to understand where critical bottlenecks exist in their logistics systems and develop alternate plans.
Do not forget to optimize each scenario and compare pros and cons that will impact cost and value in short and long term to make decisions. Companies need to stay ahead and predict changes in demand based on consumer behavior and government policies.
Procurement is a core operational function of any business or organization and organizations may likely have tens of thousands of suppliers, and they are to be treated as business partners than mere vendors. Organizations needs to be vigilant since any of them, to some extent, can pose a risk to company's operations, brand or customers. In addition, managing business partners is a difficult task that takes time, attention, and resources but at the same time buyers need to be able to monitor, manage and collaborate with entire supply base more broadly and effectively than ever before.
Communicate once, reach many
The key challenge in effective supplier relationship management is not only in how buyer deal with a small group of strategic suppliers but also it is about how best he/she communicate with larger number suppliers. Buyers should be provided with an automated system where they can address communication to specific segments of organization’s supply base. In a nutshell procurement must become supply management.
The strategic approach to supplier relationship management has always been key to successful businesses that rely on third-party suppliers, regardless of industry. Generally there are 2 approaches to effective supplier relationship management, they are reactive (relationship only in unpleasant situations) and strategic approaches (relation even before agreement is signed), but proactive supplier communication is critical in this pandemic.
Simplified Communication Module in PRM360 helps organizations by sending personal communication to all suppliers with a single click.
Managing requisitions is a balancing act. Buyers must balance priorities like available budget, time and stock against concerns about risk mitigation and maverick spend. However, balancing these concerns requires in-depth, actionable insights, and process transparency. This is precisely why procurement leaders take a greater interest in streamlining the requisition management process. This can be easily achieved with digital procurement strategy.
Most of the times procurement departments in organization set criterion to assign priorities to purchase requests keeping age and amount in mind though First-In First-Out is usually the method of choice under normal circumstances. However, the value creation and outcome are also parameters for setting the priority when there is a crisis, to ensure no impact to production or supply goals.
PRM 360 help in quickly assessing current requisitions status and devise a plan for quick turnaround time with minimal effort and interestingly there is no dependency on ERP Integration to achieve this.
Organizations of all types and sizes are dealing with the new reality. Many enterprises have disruptions in their logistic hubs and delivery routes due to restricted locations and closures. These impacts have been felt by companies, from small third-tier suppliers to billion-dollar conglomerates, with the likelihood many will not recover for years to come.
When working with supply chains especially in the crisis like this, companies need to maintain regular contact with suppliers regarding their capability to deliver goods and services for existing orders, and work out contingency plans, if required. If contractual obligations cannot be met as a result of supplier or production disruption, be prompt to negotiate. When required, promptly consider alternative supply chain options. Proactive communication and actions will help mitigate punitive damages, liabilities associated with disrupted customer obligations and damage to brand reputation.
Reimagine the supply chain model, leverage digital ecosystems and enable newer forms of collaboration to work around disrupted supply chains. Smart Delivery Management from PRM360 help you track organizations most important orders that are yet to receive and alert buyer about delivery so that he/she can apprise management before it impacts business.
All organizations are exposed to supply-side risk that can result in business failures, disruptions or shutdowns. Most procurement leaders, when they think such risk, tend to focus risks that impact internal operations. Accidents, natural disasters, situations like pandemic all have potential to seriously disrupt or shutdown internal operations. All risks are not internal since most of the firms rely on the supply chain and the abilities of their suppliers. Disruptions or shutdowns of organization’s suppliers create ripple effect within organizations and may interrupt entire supply chain. So management needs a system that identifies risks and provides insights to help change in strategy and procedures aimed to minimize such risks. Business continuity plan (BCP) consists of an integrated set of procedures and resource information that firms can use to prevent or recover from a disaster which causes disruption to operations.
We recommend you to valuate critical supplier BCPs through PRM360 Vendor Management Service and assess, prioritize, mitigate and manage supplier risk and prepare supply chain contingency plans well in advance to mitigate risks and ensure business continuity.
Business continuity planning is a an important part of effective strategic business planning and it assists leadership team with continuing company operations by ensuring business can withstand a threat, risk, or crisis like pandemic. In fact it is important for every company to build comprehensive BCP to help mitigating risk and recover from the unavoidable risks that companies face in crisis otherwise the costs of unproductivity due to catastrophic events like pandemic are sometimes irreparable.
The main purpose of a BCP is to enhance the protection of people and assets in crisis while expediting the resumption of normal operations. The four principles behind every BCP are commitment of people, total quality, growth & innovation, and customer satisfaction. The company’s objective is to protect and maintain the company’s name and reputation through the effective management of issues or concerns before it impacts the business and to protect the well-being of employees, customers, vendors, and other stakeholders.
Using PRM360, evaluate your supplier performance to understand risk involved and build alternative supplier capabilities where needed.