Simon Geale

25 March 2020
Topics in this article
  • Cost Optimization
  • Risk & Resilience

Where do you go from here?… Forwards

You don’t need us to tell you about how tragic or volatile these times are. You don’t need us to write a complex white paper on COVID-19 promoting risk management. Right now, we all need to do what we are best at.

As the world’s best procurement consultancy, we need to stand up, tell you what we know about keeping procurement functions, businesses and supply chains moving.

Procurement can make an enormous difference now, and in turnaround. Get involved.

Rather than shut up shop, our clients are now thinking about how to be the best businesses that they can, and come out the other side fighting. Here is how….

1. Keep informed

Right now one of your key challenges is to stay informed – there is a lot of noise, so cut through it and keep in touch with your customers and suppliers.

  • Think about what you need to know rather than what’s most easily accessible
  • Locate the sources that you trust to give you the best information
  • Have regular updates, don’t waste too much time in lengthy reports or mails

2. Make a “Crisis Team”

In crisis mode, next week, next month is no longer acceptable. Put a crisis management team in place to manage your resources, relationships and numbers daily. This is what consultancies do for all their short term programs where speed and action matters. Our tips;

  • Start with cost, resilience, risk, and resourcing
  • Focus on the news coming out of your supply chain
  • Talk to us if you don’t have the resource or skills

3. Optimize working remotely

Easily said, some parts of the world and industries are great at working from home. When the call went out to close offices, Proxima staff were able to take equipment there and then or request what they needed to create a productive work environment. You should also;

  • Create a communications strategy that involves all employees
  • Promote community, fun, health and well being
  • Talk more. Do daily video calls, tasks list, agendas to keep focus

4. Understand and manage demand

Even for businesses that are doing well right now demand patterns are unpredictable. Some will have collapsed, others exploded with short term gains which could in turn be a possible forerunner to long term pain. Procurement needs to stay on top to ensure there is no waste, and optimal returns.

  • Work closely with customers and suppliers to re-profile demand daily
  • Check contracts and PO’s, dynamically adjusting commitments
  • Identify new sources of supply where demand cannot be met currently

At a time when supply chains are strained, customer purchasing patterns are also changing daily, last week’s demand patterns are no longer relevant.

5. Identify and manage risk

If you don’t know where your biggest risks are now then run a rapid risk assessment. This will be an initial effort and then continuous monitoring. In time get some tech, but prioritize action (it’ll help you get the right tech in the long run).

  • Profile your business critical suppliers
  • Understand their vulnerabilities (customers, cash, staffing, supply chain etc.)
  • Use the data to manage your business priorities
  • Work closely with your team, suppliers and stakeholders

If you are one of the businesses that has fared better, you still need to do this. There cannot be any sleepwalking going on.

6. Double down on Supply Chain resilience

Based on what comes out of your risk assessment. You need to reassess your supply chain strategy. We’ve spent decades building lean, low cost and just in time but this doesn’t have to be at the expense of resilience.

  • Profile critical goods/services and supply chains
  • Work with existing suppliers on their resilience strategy
  • Set up complementary supply chains where possible, or
  • Active monitoring and scenario planning where not possible

You will have seen competitors collaborating recently in the grocery sector. Think about how you can do the same.

7. Chase liquidity in the supply chain

One of the key risks facing businesses right now is liquidity. But it might not just be your company that you need to worry about, supply chain failures will be common place and you may need to prop yours up.

  • Double down focus on payments and receivables
  • Put temporary, emergency governance across spend decisions
  • Investigate the liquidity of key suppliers and payment terms

Now is also the time to be looking at the fixed/variable cost picture as you plan for the long term.

8. Plan for the long term

In the short term, we are all going to feel some pain, and we need to get through it together. But as the abnormal becomes normal, and some markets find new models, we need to get back to competing and generating business value. Our businesses need to be as healthy and adaptable to what comes next.

  • Assess fixed and variable costs now
  • Cut wastage out of the cost base fast
  • Think about future business models, short/ long term goals
  • Build again. Re-contract with supplier in line with goals, risk and resilience plans

9. Invest in your team

In a strange way you may even notice some efficiency gains in your teams as less “office waste” is created. But as time goes on you need to protect your teams from isolation, and work out how you can create high performance for the long term. Your teams need to feel connected and valued. Now might be a good time to invest in their mental health, skills and collaboration tools.

  • Do category training/ coaching programs online
  • Consider mentoring and “buddying” programs with externals
  • Invest in market intelligence and collaboration tools
  • Get your team collaborating and innovating with each other online

10. Be optimistic

If you take action now you stand the best possible chance of coming out the other side. The world will be different, but that also means different opportunities. Act now.

For more information on how our procurement consultancy team can help you, visit our services page.

Our Services

Let’s talk.

If you are looking to drive purposeful and profitable change, get in touch.

Contact us