STATE OF FLUX
Supplier management has an important role to play in addressing supply chain risk and driving a structured, systematic, and repeatable approach to the safe operating of suppliers.
The supplier solution
O ur research shows that risk management (along with cost reduction) is one of the most often cited business drivers for supplier management with over 50% of survey respondents identifying it as the most important driver for supplier management in the next 12 months. This data was gathered well before the COVID-19 pandemic and the focus on risk management as a business driver was led by Financial Services and Automotive survey respondents, driven by regulatory compliance and operational efficiency respectively. As part of our consulting operations, we’re often asked which sectors have the best focus on supplier management to drive supply chain resilience – these are the two we cite. Effective management of supplier risk (especially as a treatment to lower likelihood and consequence of not being able to deliver safe operating) is a compelling reason to implement supplier management, yet our research reveals that only 9% of businesses are doing it effectively. That means that everyone else is waking up to the value of supplier management in the midst of a crisis.
The big question isn’t how to do it, but how to do it at speed? To answer the question we need to examine two work streams which will need to be carried out in parallel. Two workstreams for supplier management at speed 1. Building for longevity – Speed may be of the essence, especially in the midst of a pandemic, but if the time and effort of setting up supplier management is worth doing, it’s worth doing for the long- term and not just in the heat of a crisis. Furthermore, doing supplier management at speed doesn’t mean cutting corners. 2. Delivering rapid results - By addressing value delivery as a separate work stream, we can dramatically shorten the time it takes to see the benefits of supplier management. In many cases this can be reduced from months to weeks.
Risk management/reduction
58%
Cost reduction/avoidance
50%
More supplier innovation and continuous improvement
44%
Supply chain resilience
32%
Quality and service level improvement
25%
Improving supply chain efficiency
14%
Regulatory compliance
14%
The most important business drivers for Supplier management in the next 12 months. Source: State of Flux research
The majority of businesses are waking up to the value of supplier management in the middle of a crisis.”
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COVID-19 SAFE SUPPLIER OPERATING STANDARD PART ONE
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