What’s your Plan B?
Recent supply chain disruptions have highlighted the need and criticality of having a backup plan. Disruption has impacted even the most reliable of suppliers. In such cases, you have no other choice but to find alternative suppliers to work with. This is something many companies have been forced to do in the wake of the coronavirus pandemic and the impact it has had on the supply chain. In the United States, ‘Buy American’ initiatives, the rising costs associated with purchasing from international suppliers and the higher logistics costs have also pushed many U.S. companies to switch to domestic suppliers.
Not only can diversifying the supply chain help you continue operating amid disruptions and delays, but it can also help you ensure that you’re getting the best pricing possible. But pivoting to an alternative supplier is easier said than done and we frequently see companies struggle with the process of making that transition – especially when you have a single source for most of your critical materials.
Supplier Management Challenges
Supplier onboarding takes time and research. It’s a process that can’t begin when disruption occurs. It’s crucial to be proactive and get the ball rolling early on so that when the time comes, suppliers can be onboarded quickly, with all necessary approvals and compliances.
One way some companies help speed up new supplier selection and onboarding is by having an option on their website where companies that are interested in becoming suppliers can get the process started. This typically involves having the ability to upload necessary documents, initiating an automated digital onboarding process designed to make the process as efficient as possible before beginning the risk assessment process.
Procurement Risks and Mitigation
Because partnering with new suppliers always involves some degree of risk, due diligence is essential to identifying and mitigating any potential problems. Is there something about a supplier’s practices that could damage your reputation through association? Have they recently been involved in a high-profile product recall? Is the supplier on solid financial ground? Are they large enough to handle the influx of business your company might create?
Risk assessment isn’t something that should only occur during the initial onboarding process. It needs to be an ongoing process, both for primary and alternative suppliers. When alternative suppliers are needed, you’ll need to justify that decision with evidence that the risk associated with a primary supplier has become unacceptable relative to the risk associated with an alternative supplier.
Finding Solutions to Procurement Challenges
Having the right smart procurement solutions plays a vital role in helping you mitigate risk. Our digital consulting services in the areas of supply chain risk assessment and sourcing and procurement help create a connected and collaborative supplier network that allows for faster onboarding and supports automation and, therefore, timely decision-making through relevant insights. Bristlecone solutions are designed to position you to thrive on change and can help you stay ahead of disruption. Let’s get a conversation going.
