Whilst many countries and organisations are edging towards the next phase with recovery in mind, it might be a useful exercise to re-visit some questions that should have been asked a few weeks ago. And if they were asked, were there sufficient answers or solutions provided by technology?
As Warren Buffett famously said: “Only when the tide goes out do you discover who's been swimming naked.” Without shared visibility of critical information and the ability to act fast – often due to inefficient, manual processes – organisations may find themselves exposed to unnecessary risks on top of COVID-related disruption.
Let’s dive into the different 5 areas most relevant to procurement and supply chain professionals. These questions should form the basis for business continuity planning - if not for COVID-19, then the next possible disruption event.
Supply risk
| Question |
Note/Commentary |
| What countries do your Tier 1, Tier 2, Tier 3 (and so on) vendors operate in? |
There’s been discussions around reshoring and diversification |
| Which of your suppliers or vendors are affected by [crisis name]? What can you do about it? |
Learn about their business continuity plans to help with your business continuity as well. |
| Are these suppliers or vendors financially threatened because of the current crisis? |
|
| Does any of your critical categories have supply risks? |
Find out if you only have a sole vendor for any critical categories. |
| Are there any items/categories that have been affected by commodity pricing and longer lead times? |
|
| Among the affected vendors, who are potentially unsustainable with regards to their practices as these practices may lead indicators to other risk factors? |
Find the suppliers marked as ethical, social enterprise, Indigenous owned etc. in your supply chain. |
How Felix can help:
- Use Felix’s vendor tag feature to mark vendors who are available or at risk
- Broadcast important messages to vendors using the messaging tool
- Use Felix’s requalification and vendor questionnaire tool to gather supply chain intelligence
Sourcing
| Question |
Note/Commentary |
| How do you identify and rapidly qualify new vendors as needed (based on specific category and/or operational requirements)? |
Especially important to keep supply chain active for key projects. |
| Can you involve all stakeholders for quicker project approval? |
Teams are working remotely but collaboration is critical. |
| Is there a way to expedite the whole procurement & supply cycle for new project? |
An efficiency question. |
| How do you manage vendor performance? |
|
What is the best way to engage and develop at-risk and/or strategic suppliers who are vital for business continuity?
|
Supplier coaching might have been best done before the crisis, but it’s not too late to start now. |
| What is the best approach to split demand across multiple options which will help in maximising supply assurance? |
Work out how many eggs to put in each basket effectively. |
| How can you make the best award decisions amid changing business constraints? |
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How Felix can help:
- Interrogate existing database with vendor tags
- Find new vendors within linked marketplace and add to sourcing events
- Configure approval and evaluation workflows to maximise efficiency
- Set up periodic/discretionary performance evaluations and appropriate criteria
"Only when the tide goes out do you discover who's been swimming naked."
Warren Buffett
Fraud, probity, due diligence
| Question |
Note/Commentary |
| Have you identified the supplier as a valid entity and is safe to do business with? |
|
| Is the individual you are in contact with really part of the supplier organisation they are claiming to? |
Distributed and remote teams on both sides. |
| Can everyone in your organisation differentiate between a legitimate email/ invoice and a phishing scam? |
We wrote about cybersecurity and IT-related risks as part of the COVID-19 series. |
| How do you quickly and safely set up new suppliers and fast-track payments? |
|
| Are your suppliers price gouging and taking advantage of the current climate? Are they violating any contract terms? |
|
| Have you considered limiting your sourcing to approved panels and revisited purchasing thresholds? |
|
How Felix can help:
- Tailored onboarding questionnaire to suit your organisation’s risk appetite while capturing key information
- Centralised database with configurable user permissions plus audit trail
- Vendor self-service portal with banking details validation prior to any change
- Set up panels and contracted rates
Contracts
| Question |
Note/Commentary |
| Which of your company’s contracts have been affected by [crisis name]? What are the financial implications? |
This applies to contracts on both the customer and vendor’s side. |
| In what case/s can your company get out of an agreement using force majeure due to [crisis name]? |
The last resort. |
| Can you associate contracts with other critical data about counterparties (e.g. vendors, customers) and value chains? |
This helps prioritise where to focus your energy. |
| Can you plan ahead with contracts that may negatively affect your company in terms of performance obligations as well as renewals? |
|
| Can you renegotiate and amend your agreements to help you through the crisis? |
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How Felix can help:
- Central repository of contracts: No more wasting valuable time digging through emails and spreadsheets
- Leverage key data around contracts to perform analysis and take action
Spend data, supply/demand analytics
| Question |
Note/Commentary |
| How do you illuminate your supply chain beyond the first tier? |
|
| How do you evaluate and compare the cost of multiple risk mitigation options? |
Related to scenario planning and analysis. |
| How do you understand the financial impact of vendor’s failure? |
|
| What signs from the market should you look for to detect price swings? |
Is it a lone vendor’s action or a group reaction? |
| Which categories/vendors should you tackle first? |
|
| How do you evaluate individual supplier risk with data coming from multiple sources? |
|
How Felix can help:
- Centralised, up-to-date, single source of truth for vendor-related data
- Apply multiple supply chain segmentation strategies
- Gather intelligence from the vendor marketplace
- Pull vendor data from Felix into third-party software to perform further in-depth analysis via API
Conclusion
We have been echoing the view that COVID-19 acts as a wake-up call for supply chain and procurement management. Many of the lessons from the current crisis are not new and should have been learned from previous disruptions.
Further reading:
- From a financial perspective: CFOs around the world agree that supply chain transparency and risk mitigation should be at the forefront
- From an operational perspective: supply chain mapping is resource-intensive, but definitely worthwhile
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If you’d like to learn more about how Felix can help, don’t hesitate to reach out.
