Supply Chain Fragility and Disruption Recovery
The COVID-19 pandemic has not merely disrupted production in the supply chain, it has, at times, temporarily stopped it. Preparing an anti-fragile supply chain for the future should be at the top of every public procurement officer’s recovery list.
Anti-Fragile Supply Chains
Robust and anti-fragile supply chains are not the same. For years, we have focused on robust supply chains that offer the ability to completely avoid or resist change. The COVID-19 pandemic is exposing vulnerabilities in companies with the most robust supply chains because supply chains, even when at their peak of robustness, are fragile. Over 900 companies out of the Fortune 1000 have a Tier 1 or Tier 2 supplier affected by the virus. Anti-fragility takes the next step beyond robustness. Whereas robust supply chains focus on being resilient to change, anti-fragile supply chains focus on improving because of change.
The principle theory behind the anti-fragile supply chain is that disruption or change is inevitable. As public procurement officers are hyperaware of how quickly one small change can disrupt an entire acquisition, the same can be said on the supplier side. Resilinc conducted a survey in late January/early February and found that most of the 300 companies that participated were still in data-acquisition and review mode. Meaning, these companies were still trying to figure out what links in their supply chain were affected from the halt of production.
Disruption Recovery in Public Procurement
How much do you know about your supply chain?
Supply chain mapping is the process of engaging suppliers and companies to document the exact source of every material, every process, and every shipment to bring goods to market. From a public procurement perspective, the COVID-19 pandemic has exposed that most of supplier mapping is left to human intelligence.
Much of what is known about supplier relations/supplier mapping is usually anecdotal and often learned over time through building relationships. When central procurement offices have a personnel change this information can be lost. It can take a new employee years to develop relationships with your immediate suppliers and build the same knowledge base your office held previously. Help protect yourself from this situation in the future, and make sure you are documenting your suppliers’ supply chain map.
Supply Chain Mapping
SourceMap, a supply-chain mapping and geo-analytical firms offers six steps to building a supply chain map:
Find out what your supply chain looks like
Do you know where your suppliers are principally located? To be able to prepare for any disruption and improve your chain during it, you need to know where your goods are coming from and be aware of market issues affecting their location.
Identify the suppliers you didn’t know you had
Managing your extended supply chain network will allow insight into your Tier 2 suppliers. Once you have this network outlined, you can make note of possible risk/disruptions.
Thoroughly documenting your end-to-end supply chain gives procurement officials their own crystal ball. Procurement professionals will be more knowledgeable about possible risk or supply chain disruption.
Manage continuous improvement for direct (Tier 1) and indirect (Tier 2) suppliers
Supplier engagement is crucial to good supply chain mapping. Strong supplier engagement offers the opportunity for continuous improvement conversations and identification of how the relationship can be beneficial to all parties.
Trace every product from raw material to finished good
Ask your suppliers the following questions, and take note of what they say:
Where they get their raw materials from?
Where production/manufacturing is?
How it gets delivered to you?
Share your story
In the supply chain world, transparency is trust — share with your fellow public procurement professionals what you learned! This will build trust for your suppliers and strengthen your supplier relationship.