Quick Read: 6 Supplier Relationship Lessons from the Survivors
2020 was the ultimate stress test – but we passed and the results are in! BuyerQuest CEO Jack Mulloy hands down the 6 top supplier relationship takeaways.
Businesses that were not forced to close during the pandemic and were able to continue operations faced a new challenge. As certain products exploded with demand and global commerce ground to a halt, finding direct and indirect materials became a challenge. Global supply chains were put to the test, and companies quickly learned who their true, trusted suppliers were.
The global pandemic created a global “stress-test” for the people, processes and technologies across the supply chain. Companies with access to strong analytical data and a broad, deeply engaged supplier base were able to better respond to the almost daily changes.
Businesses learned a lot about their internal processes in 2020 – now is the year for analysis and action to uncover risks across the supply base and prepare for what happens next.
Six lessons from those who survived and prospered include:
Global and Local Suppliers are Critical
For organisations that centralised buying, it was challenging to meet supply needs. With the situation changing regularly and each geography having different restrictions on operations, it became critical for these central buyers to empower their local resources to make the best decisions for their region. There were cases where a local IT category supplier had access to hand sanitiser. As certain products were in high demand, payment terms became “on-receipt” for those products, and the local staff needed the flexibility to respond.
Creative and Nimble Suppliers are Invaluable
Procurement organisations spent years developing strong relationships with suppliers. This event was the test. Could the preferred supplier deliver, or were they less-flexible than a small, local supplier? Supplier categories were less important than access to, and ability to, deliver product.
Analytics are Critical
Businesses that had previously invested in technology had the benefit of intelligence to be preemptive and not just reactive. In some cases, they were able get ahead of issues that may have begun in one region and had not yet occurred in another by preemptive sourcing, rapid supplier onboarding and other activities. Companies with “ruggedised” systems and processes were able to look across the tens of thousands of suppliers, and billions of dollars in spend to uncover trends that could be used to predict future actions.
A Modular Technology approach makes hitting “Pause” easier
For businesses in the midst of a multi-year, global technology rollout, stopping that project to address the immediate corporate needs only delays the time to value the technology. Companies who approached technology deployments from a modular perspective were likely already gaining value and may have been able to use what had been deployed thus far to their benefit, particularly if supplier on-boarding was part of the early phases.
Supply Management needs to be both Central and Distributed
As product orders started to be filled, but at lower levels, the procurement organisation had to centrally manage distribution to sites to avoid the natural “hoarding” behavior of local locations. It falls on centralised procurement teams to use data analysis to determine how much product to deliver to each location in order to avoid over/under supply issues.
It’s about Agility
No matter what the challenge or risk, organisations that are able to be flexible, are willing to empower resources to be creative, and have built strong relationships will be best positioned to navigate supply risks should they appear.
With 2020 now behind us, focusing on fundamentals and risk mitigation will be the trend of 2021.
