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Home » Blogs » Think Tank » In the Game of Supply Chain Management, Remember These Five Moves

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In the Game of Supply Chain Management, Remember These Five Moves

Supply chain worker
Photo: Bloomberg
June 16, 2021
Stephany Lapierre, SCB Contributor

Supply chain constraints and disruptions across a slew of industries are making it difficult for businesses to keep up with soaring demands and rising prices. How can companies come out on top? 

These five areas are key for a seamless supply chain as we emerge from the COVID-19 pandemic.

Risk management. Procurement professionals must consider a myriad of factors when working to protect their organizations from risks, especially when working with vendors with customer data access. Be incredibly diligent in document verification and validation, and consistently monitor suppliers for signs of cyber security risks. Be sure you have a mechanism in place to produce a security rating, monitoring tools, and the resources to collect and manage this information. If the supplier in question is willing to provide that to you, great, but don’t take their word for it — do your own research as well.

Also be aware of any risk factors associated with social responsibility; ensure you are well aware of where suppliers are located and where they do business, if they work with sanctioned countries or flagged companies, and if they operate sustainably and with diversity in mind.

Relationship management. Supplier relationship management (SRM) is a systematic approach to assess suppliers’ contributions to your business. This is a great way to help you determine which suppliers hold the best influences on your success and performance. 

Relationship management requires a multi-tiered approach that looks at business process improvement, supplier segmentation and strategic partnerships. The way you approach relationship management is going to differ depending on the type of supplier you’re dealing with and the relationship you have with one another. Ensure that you’re segmenting your business’s supply chain to ensure there isn’t a domino effect if one of them fails to come through for whatever reason.

Diversity and opportunity. Don't lock yourself into a few narrow options when you have no reason to do so. You should consider sourcing from small, medium and large suppliers according to your needs and what they can provide. By doing so, you’re not only diversifying your own portfolio of suppliers, but you’re also ensuring that those suppliers have a broad swath of suppliers to access, which goes a long way in making sure that there won’t be any business interruptions as a result.

As you diversify your suppliers, track the spending differences between large and small suppliers to ensure you’re not paying the “small business tax” and taking on a smaller organization’s operating costs. However, sometimes the cost is worth the convenience of working with a smaller supplier; they are typically more responsive, more eager to work with customers, have innovations that will help you and generally be more conscious of their overall impact.

Contract and spend data. Keep everything in one place for anyone who needs it. When it comes to contract centralization, it’s important to collect rate cards, off-list discounts, acceptable terms and transferrable usage across all regions and lines of business. Making that spend data available across all buyers in an organization will ensure that, no matter what happens internally, your suppliers will still be able to work with you seamlessly.

The benefit to this is making sure that your suppliers’ employee turnover or restructuring won’t impact the way you do business. And if you need to take your business elsewhere for any reason, all your documentation will be in one place, making that transfer seamless enough where you won’t lose profits or time.

Savings vs. strategic growth. While you don’t necessarily have to spend money to make money, you should be prepared to incur some costs as a result of an uptick in demand and growth. If you find that you outgrow your current supplier and need to transfer to another supplier equipped to manage your growth a bit better, you’ll need to ensure your savings expectations are in line with the shift.

Between an ever-growing global commerce and the recent strains on almost every industry due to the COVID-19 pandemic, it’s now more important than ever to ensure you’re equipped to play the game of “supply chain chess.” By ensuring you’re prepared to tackle any issue your supply chain may throw at you, you’ll be well-equipped to face these challenges and ensure your business comes out on top. 

Stephany Lapierre is CEO of Tealbook.

Data Management (Big Data/IoT/Blockchain) Supply Chain Finance & Revenue Management Sourcing/Procurement/SRM Technology Business Strategy Alignment Global Supply Chain Management Supply Chain Security & Risk Mgmt

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