Manufacturers can take immediate action to mitigate supply chain devastation caused by the novel coronavirus.
By Danny Thompson, SVP of Market and Product Strategy at apexanalytix
Major impacts of the coronavirus on global supply chains have been well-documented — and experts don’t expect the effects to slow down anytime soon. Many U.S. companies are experiencing longer lead times and a shortage of transportation options to move products from international suppliers into the country. According to a recent survey by the Institute for Supply Management, nearly 30% of companies have seen an impact on their operations in the first half of the year alone.
Despite the current uncertainty surrounding the pandemic, there are steps manufacturers across industries can take to avoid devastation to their supply chains, including properly managing relationships with suppliers, implementing automated controls and adjusting business continuity plans to prepare for future disruption.
Improve supplier relationships
You should always strive to establish regular and open communication with suppliers, but the current crisis warrants extra care. Even if you typically only communicate with suppliers via phone or email, regular video check-ins are a good idea right now.
Face-to-face communication, albeit via a screen, provides literal visibility into a partner’s working environment, enabling you to evaluate ongoing capabilities and determine business continuity. Additionally, video check-ins introduce an element of humanity to the situation and can help you ensure your suppliers have the operational and working capital support they need.
With every call, stress the importance of partnership in these uncertain times and your appreciation for openness. Communicate that you’re willing to collaborate around any issues or opportunities, even if prior agreements can’t be fulfilled due to the circumstances. Go above and beyond by asking suppliers to suggest additional ways to support each other. For example, offer to make early payments on open invoices or donate to a local cause trying to alleviate the current problem in your supplier’s region. Checking in with your partners and offering additional support — even if it’s just in the form of a friendly face — is crucial to establishing strong relationships you can lean on down the road.
Double down on cybersecurity
In addition to managing your supplier relationships, it’s crucial to be on high alert for an uptick in cyberattacks. The FBI has experienced a 200-300% increase in cybercrime complaints amid the coronavirus outbreak, an increase from 1,000 per day before the pandemic to 3,000-4,000 complaints daily.
In the past, payment fraud attempts have risen — and been more successful — at times when key employees are out of action. For example, retailers regularly see an uptick in fraud attempts while employees are out of the office during the holiday season. As more organizations adjust to the “new normal” of remote work, businesses of all sizes should be particularly concerned about the immediate threat of business email compromise (BEC) attacks.
The most common misconception about BEC scams is that the threat is limited to direct attacks on your own email environment. However, supplier email environments can also be compromised, enabling bad actors to divert supplier payments to their accounts. Automated controls that validate bank account ownership are the only way to stop highly sophisticated attacks like these.
Rethink business continuity plans
Many employees look forward to the day when they can return to the office and go back to their normal everyday activities, but with a potential second wave of coronavirus infections later this year or next, business environments and forecasts will be anything but “normal” for the foreseeable future.
Take a moment to reflect on the lessons you’ve learned during the lockdown and revise business continuity plans accordingly to increase future preparedness and reduce potential risk. For some manufacturers, this means replacing manual controls with automated sourcing and supplier on-boarding solutions. And others may want to implement supplier risk management processes to ensure suppliers have their own business continuity plans in place.
Additionally, accounts payable departments need to keep the longevity of their financial supply chain — or more simply, their supplier’s cash flow — in mind. Manufacturers may even consider offering their own early payment programs (if they have the funds available) or introducing suppliers to their supply chain financing providers. By offering early payments to suppliers, you could capture a discount on the invoice, making it mutually beneficial for all parties.
With the proper supplier management, fraud prevention and business continuity practices in place, manufacturers can achieve business objectives and better serve their suppliers and customers amid ongoing disruption. More importantly, they’ll build long-term resilience that will see them through the next crisis.
About the Author
Danny Thompson is SVP of market and product strategy at apexanalytix, responsible for defining, communicating and leading the company’s software product strategy and roadmap. He works closely with customers to ensure that each solution helps them meet their business objectives.
Danny has a proven track record in the procure-to-pay arena, with a strong background in ERP implementation, process automation and financial shared services. He previously was vice president of product management at Tungsten Network, a global business-to-business e-invoicing firm. He also is a former global process driver for invoice-to-pay at Pfizer.
Danny earned a B.A. degree from Harding University.