Weathering Future Disruptions: 8 Steps to Building Supply Chain Resilience

by Doug Keeley

In the face of an unprecedented global crisis, Procurement stepped up to become a crucial driving force for business continuity. The pandemic saw incredible growth in this area and highlighted opportunities for improvement within procurement processes and procedures. 

As teams worked with suppliers through creative solutions, it became obvious that transparency and supplier risk management are essential components to maintain stability during crises like these.

While many businesses suffered severe setbacks and disruption as a result of the pandemic, some organizations were able to pivot quickly enough to remain operational. But building an agile, resilient supply chain doesn’t happen overnight; it requires forethought and planning.  had already been developing a supply chain risk management program and were in the midst of executing digital transformation initiatives when the crisis hit. Fortunately, we can learn from procurement leaders such as , and leverage their lessons learned to prepare for what the future may bring. 

Below, we list 8 steps that manufacturers can take to build a more resilient supply chain in a post-covid world. By taking these steps, manufacturers will be better prepared to weather any future disruptions.

1. Work to achieve 100% supply chain visibility. 

Why is visibility so important? Procurement teams are now expected to manage a lot of moving parts — from supplier relations to spend, risk, compliance, contractual obligations, contingency plans and more — and a lack of visibility inhibits their ability to do any of that effectively. Visibility across every aspect of the supplier relationship management is essential to making informed decisions or seizing opportunities, and it’s instrumental in speeding up the procurement process, reducing costs and collaborating with suppliers to better meet the needs of the business.

2. Focus on digital transformation and adopt procurement technology. 

Procurement technology can play a vital role in digital transformation. By automating repetitive tasks and streamlining processes, procurement technology can help organizations save time and money. Additionally, procurement technology can help organizations improve compliance with regulations and reduce risk. Procurement technology can also help businesses improve supplier relationships and enhance communication between buyers and suppliers.

3. Create speed and transparency. 

Digital transformation will lead to the evolution and digitization of key procurement processes, from Source-to-Pay. To achieve true supply chain resilience and maintain it over the long-term, processes must emphasize speed and transparency, and that requires leveraging platform-driven workflows that complement and standardize investments in process re-engineering. Making processes transparent enables everyone along the supply chain to react quickly.

4. Be proactive to mitigate supply chain risk by understanding your suppliers. 

Supply chain disruptions are becoming more and more common, so it’s important for businesses to be proactive in mitigating risk. One of the best ways to do this is by understanding your suppliers. By tracking key performance indicators, conducting regular audits, and building strong relationships, you can be better prepared to weather any storms that come your way.

5. Balance supply chain risk and resilience with ROI. 

There are a few ways to balance supply chain risk and resilience with ROI: 

Diversification: One way to reduce risk is to diversify your supplier base so that you’re not relying on one supplier for all of your needs. This way, if one supplier is impacted by a disruption, you can source goods from another supplier. 

Flexibility: Another way to reduce risk is to build flexibility into your supply contracts. This way, you’re not locked into long-term contracts with suppliers who may not be able to meet your needs in the event of a disruption. 

Insurance: You can also purchase insurance to protect against disruptions in the supply chain. This will help offset the costs associated with disruptions. 

6. Simplify approvals with clearly defined roles and responsibilities.

Now that you have identified all of the stakeholders involved in the approval process, it is time to assign roles and responsibilities. Who will be responsible for what? Be sure to consider both skillset and workload when making assignments. You don’t want one person to be overwhelmed with work, nor do you want someone with no relevant experience attempting to approve a project. Once roles and responsibilities have been assigned, be sure to communicate them clearly to all involved parties.

A well-functioning organization depends on clearly defined roles and responsibilities. This is especially true when it comes to the approval process. Without a clear understanding of who is responsible for what, approvals can become bogged down, delaying important projects. In procurement organizations, defining roles and responsibilities is even more critical, as there is often a great deal of money at stake. By taking the time upfront to properly define roles and responsibilities, organizations can save time and money in the long run.

7. Set expectations with suppliers. 

Your Procurement team should set clear expectations for suppliers — and it’s important to constantly re-evaluate supplier agreements and make necessary adjustments. Perhaps 30 days of inventory isn’t enough in times of crisis, and terms should be updated. Teams should also revise expectations for tier-two and tier-three suppliers, shipping and freight partners. Setting expectations ahead of a crisis is critical to reducing risk, avoiding liability claims and mitigating potential losses.

8. Get the right talent in place.

Resiliency in a post-Covid world will depend largely on having the right talent — but recruitment has historically been challenging because of a lack of information about the opportunities that await newcomers to the field. It’s critical to communicate how the function has evolved and the impact procurement professionals can have on a business’s success, particularly in a post-Covid world.  is elevating the position to candidates by making them aware of the various aspects of Procurement beyond sourcing and category management.

Preparing for the Next Storm: Creativity Is Key for Success in the New Normal

It’s no secret that the way we do business has changed drastically – and there’s no telling when it will return to ‘normal.’ As businesses continue to pivot during the pandemic, creativity will be key. The power of collaboration allows for more innovative solutions, improved efficiency and a reliable supply chain in even the most uncertain times. Together we can build resilience as we work through this crisis and create tangible progress going forward!