August 9, 2023 Managing Supply Chains Through Volatile Times

Organizations must learn to collaborate more effectively and build a strong foundation to ensure supply chain continuity.

Many supply chain leaders were unprepared when the pandemic hit, and businesses struggled to maintain material supply continuity. Fast forward a few years, and procurement continues to be more challenging than ever. Companies still struggle as geopolitical volatility, natural disasters and inflation disrupt supply chains in unpredictable ways making it challenging to strike the right balance between supply and demand.

Supply continuity is a complex challenge, but success is much more likely if you address key obstacles. I have outlined below several key strategies to create a more resilient supply chain:

1. Build a Solid Data Foundation

The success of any transparency strategy relies heavily on building a solid data foundation, particularly when it comes to suppliers. For most organizations, data remains fragmented across many systems, with duplicate supplier records and errors, along with no effective way to consolidate internal, supplier-provided, and 3rd party information. This places limitations on the value that procurement generates for your organization and impacts the resilience and agility of the supply chain.

Leading organizations proactively plan their digital transformation around data to gain control over master supplier records, compliment existing data with third-party information, and ensure users have easy access to insights when and where they need them.

2. Ensure 360-Degree Supplier Visibility

The most fundamental element to effective decision making, whether regarding risk or other factors such as performance and cost, is having a complete view of suppliers. You must understand who you are purchasing, or could purchase from, and all relevant details about that supplier. Data will almost certainly come from a variety of sources – the supplier, employees and a range of 3rd party sources. But to be able to save time accessing it and effectively consider all data, you need to have it at user fingertips in one place.

As straightforward as this sounds, it remains a major obstacle for most organizations. Technology is essential, but often creates as many issues as it solves. Point solutions spanning the Source-to-Pay (S2P) process, or suites cobbled together via acquisition or siloed development create new problems, with different information captured in different places and linked to distinct supplier records. Be sure to ensure data is unified across the S2P process and solutions offer native integrations to a robust ecosystem of relevant 3rd party data sources. This ensures you can have a true 360 degree view of each supplier.

3. Map Your Sub-tier Supply Chain

That visibility must be as deep as it is wide. As supply chains have grown longer and more complex, businesses have become increasingly exposed to risks within their suppliers’ supply chains. And while most organizations have at least moderate visibility into their direct suppliers, visibility into the sub-tier remains universally poor. Companies typically struggle as they rely on manual, offline processes to capture and consolidate supplier information to gain a view of the full supply chain. Leading businesses are automating this process. That approach not only saves time, but allows more complete mapping and better assessment of sub-tier suppliers leveraging 3rd party data.

4. Take a Portfolio Approach to Category Risk

Most organizations could do a better job of assessing the risk of their suppliers, particularly through the lens of a category. To minimize the risk of disruptions, leaders are taking a lesson from investors, who have long understood the value of diversification. Category managers should assess the level and types of risk of each supplier within a category selecting two or more suppliers with diverse risk profiles, thereby building in some resilience.

5. Implement Effective, Scalable Supplier Collaboration

The supply chain is the lifeline of companies and the backbone of the business process. But the supply chain is susceptible to various hazards and uncertainty, requiring a level of resilience that depends on effective collaboration and monitoring. Successful supplier strategy anticipates changes in demand and responds quickly.

Procurement and supplier management have become a central part of supporting strategic priorities for organizations – whether it’s helping to mitigate disruption or improving ESG metrics. Effective supplier management will be agile enough to identify disruption and the impact it will have on suppliers and take action. But this can only be achieved by investing in processes and systems that enable organizations to collaborate with suppliers and monitor progress, and gain rich visibility into every aspect of their supply chain.

About the Author:
Doug Keeley is Product Marketing Manager at Ivalua. Prior to joining Ivalua, Doug spent 12 years with Directworks in Sourcing Consulting and Customer Success. During this time, he managed consulting engagements, worked with customers to implement lean processes, and managed SaaS implementations for global manufacturing enterprises. Doug has a B.S. in Marketing / International Business from the Pennsylvania State University and MBA from the University of Pittsburgh. He is leading global marketing activities for upstream procurement.

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