Optimism is in the air. With more and more COVID-19 vaccination programs underway around the globe, economies will begin to re-open, and international trade should start to rebound.
Nevertheless, with new variants of the virus emerging, and logistical difficulties in delivering the vaccine, it’s important for businesses to take an agile approach. Indeed, the World Trade Organization’s latest Goods Barometer suggests that world trade might encounter fresh delays as these types of issues continue to arise.
So how should businesses prepare for continued uncertainty, even as things are starting to look more positive?
The question is especially pertinent to supply chains. As economies open, businesses need to consider whether the pre-COVID-19 supply chain is suitable for new circumstances. Will changes made during the height of the pandemic be suitable as we enter a new phase? Will regional variations in COVID-19 restrictions require more flexibility? Can organizations still adapt quickly, or have they settled into a new routine?
Procurement teams should start by looking at supplier contracts. Pre-pandemic contracts have often proved insufficient when tested by the challenges posed by the virus. It’s important to remember that not only has your business changed due to the pandemic, but your suppliers’ businesses have as well.
When re-engaging a supplier or continuing work with an existing one, now is a good time to take a second look at the contract to consider whether changes should be introduced. Depending on how fit for purpose the contract is, it might be necessary to re-negotiate it in its entirety. This could serve to protect your business as well as a strong commercial relationship that has taken time to build.
Not every business successfully weathered the coronavirus storm. If you need to replace a supplier, consider again whether pre-coronavirus strategies, or even those from 2020, are still fit for purpose.
While it’s never good to lose a reliable supplier, when it happens, it can be the perfect time to make a change. When sourcing a new supplier, consider how to reduce risk and mitigate against potential future disruption.
Can you work with a higher volume of suppliers, to spread the demand across multiple companies? It worth re-thinking where the suppliers are located? In pandemic times, would a location “closer to home” make more sense?
Zara’s owner, Inditex, recently heralded the idea of “proximity sourcing” for helping the fashion giant weather the pandemic, with reliance on suppliers closer to its headquarters and in a number of select regions.
Many aspects of the supply chain have been digitized during the pandemic, and procurement is no exception. Digital services can enable more efficient, lower-risk processes with new suppliers.
Supplier qualification and selection tools integrate into a central supplier directory, automated supplier and contract monitoring, and supplier self-service profile maintenance, all of which serve to increase visibility into each supplier’s ability to perform. Such visibility, created through integrated digital platforms, can further reduce risk.
The prospect of global economic reopening is real, and hugely exciting for businesses that have been halted by closures and disruptions over the past year. But it doesn’t come without risk, and resuming trading internationally might not be as simple as turning the lights back on.
Proper evaluation of the supply chain now, with steps taken to minimize risk, will help prepare businesses for further uncertainties that will inevitably arise in the coming months.
Brian Miller is vice president of managed services at Proactis.
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