Now more than ever, organizations must prepare their supply chain for the present and the unknown challenges and opportunities in the future. And even before they begin, they must realize these problems are too big for any single team—supply chain must connect with finance and procurement to treat the n-tier suppliers as an extended part of their network and become their preferred customer.
Organizations must take the following steps to bring departments together to create truly resilient and sustainable supply chains:
Leverage external data to sense market shifts
Look to external causal factors and forecasting models to identify market shifts. Integrating external factors like consumer price indexes, GDP trends, climate change, and others into the forecast can improve signaling for supply chain design. Doing so helps organizations detect market shifts and makes supply chain decisions more forward-looking than an analysis of the past, present, and at best, a tactical view of the future.
Make sustainability a factor in designing your supply chain
Integrate sustainability into the supply chain design by explicitly accounting for and modeling greenhouse gas (GHG) emissions. This makes decisions not only about cost, service, and inventory trade-offs but also about risk and sustainability.
Discover capability gaps and create sourcing events
Seek and discover what capabilities the organization may be lacking, such as vulnerabilities or inefficiencies in transportation or supplier capacity. Supply chain design can help identify and flag such capacity and capability gaps. By identifying these gaps, you can create sourcing events to close them.
Enable data sharing at supplier onboarding
Improve visibility by capturing specific data at supplier onboarding, such as diversity, sustainability, and risk factors. Beyond amassing the relevant data from suppliers at onboarding, standardizing it for repeated use and updating will be critical to ensure supplier risk and performance management.
Monitor n-tier suppliers for risks
Continually monitor suppliers for single points of failure or new sentiment around sustainability, human exploitation, or diversity. This calls for treating suppliers as partners in a relationship built on trust and transparency that reduces risk across the supply chain and ensures business continuity.
Adjust supply chain design to mitigate supplier risks
As supplier risks increase, remedial actions can be initiated while scenarios can be run to assess redirecting partly or fully the orders to alternate suppliers. These scenarios should consider any financial implications, such as missing out on price breaks or preferred customer discounts.
Earn preferred customer status
In a supply-constrained world, the tables have turned from being a preferred supplier to being a preferred customer. When materials and capacity are in short supply, earning the supplier’s trust by making timely payments and providing early visibility to orders and forecasts will undoubtedly help. For this to happen, finance needs to be in lockstep with procurement.
Impact ESG at the point of decision
Move from passive reporting to active impact. For example, start at the sourcing process to find, all else being equal, more sustainable suppliers, women-owned, or have characteristics that support compliance. Designing vehicle routes that explicitly optimize transportation routes with carbon footprint considerations is another example.
Make collaboration a way of doing business
Make resilience and sustainability a team sport and a part of the company’s DNA. Establishing these qualities in the C-suite and injecting them into every level of the organization can create the perfect environment to prioritize investments to drive resilience and sustainability.
Despite the challenging conditions and uncertainty of what lies ahead, leaders who embrace disruption and use spend to connect supply chain, procurement, and finance can find exciting new opportunities and gain a competitive edge. Companies must adopt a data-driven means of determining risk exposure levels, evaluating substitutions, enhancing resilience, and creating a framework for smarter and faster decision-making. Threading the supply chain needle gets easier when all the fibers are connected into a single, common strand.
1. Leverage External Data
– Integrate market-shifting factors into forecasting models.<br>- Use external data for forward-looking decisions.
2. Integrate Sustainability
– Account for greenhouse gas emissions in supply chain decisions.<br>- Balance sustainability with cost, service, and risk considerations.
3. Identify Capability Gaps
– Detect weaknesses in transportation or supplier capacity.<br>- Organize sourcing events to address gaps.
4. Enable Data Sharing
– Capture diversity, sustainability, and risk factors at supplier onboarding.<br>- Standardize and update collected data for management.
5. Monitor N-Tier Suppliers
– Continuously watch for risks in sustainability, exploitation, and diversity.<br>- Foster transparent relationships for reduced risks.
6. Adjust Supply Chain Design
– Initiate actions to counter increasing supplier risks.<br>- Run scenarios for alternate supplier orders considering financial impacts.
7. Earn Preferred Customer Status
– Build trust through timely payments and order visibility.<br>- Align finance and procurement for preferred customer status.
8. Impact ESG at Decision Points
– Prioritize sustainable sourcing and compliance-supportive characteristics.<br>- Optimize transportation routes for reduced carbon footprint.
9. Make Collaboration Key
– Establish resilience and sustainability throughout the organization.<br>- Prioritize investments for resilience and sustainability.
Nari Viswanathan is currently Sr. Director of Product Segment Marketing at Coupa Software, where he brings products to markets in the areas of Direct Material Procurement and Supply Chain Design and Planning. Over the past 20 years, Nari has held VP and Director of Product Management, Research and Marketing roles at Aberdeen Group, River Logic, Steelwedge and E2open. He has significant experience building products from the ground up and managing the P&L for a product suite. He is a proven B2B marketer with expertise in content marketing, competitive intelligence, and positioning. He has published numerous thought leadership articles, whitepapers, blogs and delivered dozens of webinars during his career. Nari Viswanathan is a six times SDCExec Supply Chain Pro to Know award winner. Nari holds a master’s degree in Manufacturing Systems Engineering at the University of Wisconsin-Madison and a bachelor’s degree in Mechanical Engineering at the Indian Institute of Technology, Chennai.
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