Step 3: Supplier management • Re-align supplier segmentation criteria • Create deeper more transparent relationships • Improve communication and information sharing • Work with suppliers and the business to become more agile • Extend performance management to include supply chains • Improve planning and demand forecasting • Improve vigilance and risk management Supplier management is key to the mitigation of risk and the boosting of resilience. In our 2021 survey a total of 65% said relationship management was the most effective element of supplier management in mitigating the impact of Covid. Communication and collaboration continue to be key to managing risk. A trusting and transparent relationship means you are more likely to be aware of what’s coming, and more able and willing to resolve it. Open and honest conversations should include the development of joint risk management strategies. It
Round and round Using the procurement lifecycle to reduce risk and build resilience is a continuous and iterative process. Everything that is learned about the market or suppliers at each step can be used to inform the next version of the strategy. Ask yourself: Did the supplier perform adequately? Should you renew the contract? What do you know about the current market - are there new players, alternatives, fresh developments or innovations? And if supplier and category management are carried out by different individuals, ensure they talk to one another. That way, supplier management becomes a stakeholder in developing the future category strategy. Don’t forget that no matter how much effort you put in, some kind of crisis will occur at some point. Ensure your procurement team is adequately trained to manage a crisis. Just as trauma staff know what to do in an emergency. Support them with technology to remove some of the guesswork and give them the space and time to do what only people can. Organisations increasingly have a risk manager or director at board level who can mobilise a team when a crisis occurs, procurement should be part of that team. All this requires work and preparation. It isn’t about seeking a silver bullet but nor too do you need to abandon tried and tested methods. They simply need reinventing or revisiting to ensure they can cope with changing circumstances. Thoroughly review your procurement processes to strengthen each element that builds resilience. Invest in training to ensure professionals are comfortable handling, recognising and mitigating risk; and ensure you build trusting transparent relationships with key suppliers so you can handle hurdles together.
is good practice to carry out a risk review with all your major suppliers once a year and to jointly consider how the world has changed in the past 12 months and what actions you might need to take. Supply chain mapping should form part of this conversation to help you identify and mitigate potential risks, and supplier development may include helping your providers to manage their own. This ensures good practice flows down the chain. If you have good processes, why not share them? You can work clauses into contracts, such as an expectation to hold regular reviews, but you may need to help them to achieve it. If they don’t know how to run sessions or have the right KPIs, help them out. If you do include clauses, ensure you follow up on them. Most contracts require suppliers to plan for when something happens, but rarely are they checked. Ask to see a continuity plan for the top 3-5 risks, and help with some scenario planning. And remember there will be costs attached to these requests both from the supplier, and from you if you are to carry out audits, site checks, scan paper trails, conduct regular reviews, or arrange third-party assessments. And a warning: Don’t rely on performance management to identify risk. It may flag something, but that issue could have occurred three months before showing in any metric. Active monitoring will enable you to catch, or even predict problems, before they impact performance. A current leading indicator of a future problem is the UK’s employment situation. As businesses are finding it hard to recruit staff, they are employing less capable individuals, which means, at some point, service quality is likely to drop.
is on hand Help
Implement Supplier Management at speed without any additional headcount or resources. State of Flux managed services delivers flexible people, processes
ARMOUR OR AGILITY?
The word ‘resilience’ suggests you have to put on a suit of armour for protection, but sometimes the answer is to drop the heavy armour and be fleet-of-foot to swerve the problem in the first place.
and technology to give you head start. Ask us how.
14
15
Powered by FlippingBook