3 points on “How to survive supply-chain disruption”
As businesses react to the requirements of Covid19 combined with Brexit requirements, options are either to improve overall understanding to both safeguard and grow opportunities or risk an overall weakened and damaged organisation.
Preparation is the key to survival
We help our clients by starting with a review of your current status and all elements to establish flexibility whist prioritising actions in line with your desired outcome
POINT ONE
Supply chain mapping – this is an absolute essential for the whole business to understand and appreciate, the facts. Why? Because it reveals where your risks and opportunities lie and where potential constraints and weakness are present.
Ask yourself what would happen if your supply chain lengthens by 3-4 weeks:
Inability to fulfil current demand requirements – putting strain on your business
Unbalanced inventory, cost growth, lower working capital
Opening for competitors to take away your opportunitiesHigher operating costs and reduced cash inflow
Increased storage
Increased transportation as real time performance is negatively affected
Waste resource – doing things twice.
Look inside your operation
• Do you know what activity happens in your supply chain and the time periods associated?
• Do you review your supply chain? If so; what have you concluded?
• How is your ability to service your customers directly affected by your supply chain?
The benefits of reviewing your supply chain
• Risks become evident that can create future problems. As an example, if you have a specific reliance on an item, what is the plan to protect your business?
• Decisions taken can be reviewed for effectiveness.
• The effect of time can be valued against a number of key parameters.
Consider how your supply chain affects your customers
Often the two are not correctly linked in the organisation. Customers have to be the prime driver for all activity; your supply chain exists to support this. If your supply chain is changing it will affect your customers. This detail has to be communicated and managed carefully.
Therefore, doing nothing ensures – poor performance, customer damage and decline.
POINT TWO
Supply Chain review - Agreements and Specifications
In our changing world; updated agreements have never been more relevant. The commitment relevant at the outset may need adjustment to support a realistic plan and way forward for both parties.
Some key internal questions, to consider
• Do you have agreements that cover activities within your supply chain?
• Do your agreements deliver what they are intended to do?
• Do you have joint customer specifications agreed?
• Do you have robust, unambiguous measurement criteria in place?
The detail
By understanding and defining key needs by use of concise and relevant agreements focuses internal attention on key elements. These agreements should be drawn up professionally and be mutual to both parties. Mutual agreements engender partnerships, ensure review and allow speedy resolution.
To include:
Time related controls and needs – such as delivery, samples, responses etc.
Enforceable definitions such as Inco terms, payments, force majeure
Review process and escalation process that delivers a resolutionBreak clauses
Customer specifications must provide a full and concise framework. The specification encapsulates and defines the requirements of your supply chain. If your supply chain is not delivering full compliance to your customer specification, then you are wasting opportunity and value along with opening the door for those who will.
Measurement - this has to be matched clearly to your customer specifications and contain both qualitative and numeric measures. To expand further, the data has to be meaningful and relevant and have the ability to demonstrate trends and be the basis for improvement. There are many tools but certainly ensure OTIF (On Time In Full) is first as this provides clear logic matched to what your customer receives and feels.
Define all needs carefully with professional input, create partnerships, work together don’t accept deviation.
POINT THREE
Managing change within your Supply chain when “Importing and Exporting”
As time and cost restrictions are affecting our current supply chain in terms of components it’s time to think differently
Some key internal questions, to consider affecting your existing contracts
If you import product, are the resultant changes workable?
If you export product, are the resultant changes workable?
Maintaining standards of an existing product when supply changes are necessary
Consideration should be given to delivering the best overall option for your business and contractual needs. This may indeed include a full review of your make, buy approach. An amendment to your contract may be necessary.
Duties and tariffs should be part of the overall considerations when piecing together the best set of options for you
A review may reveal that the requirements cannot be fulfilled in either a financially sustainable manner or the additional time added within your supply chain – rendering the contract impossible to fulfil without agreed amends.
Making any change should involve as many strategically beneficial solutions as possible.
These often include:
Defined substitution agreements, with multiple suppliers in possibly different geographic areas.
Structured protection against disruption and price volatility.
A solution may reveal that key parts are imported and put together on a de coupled basis. This both protects the intellectual property an offers flexibility of both cost and volumetrics.
Exported products may have different countries of origin and may attract different levels of duties and requirements. Strategically the route to market should be reviewed particularly as Distribution and Agent agreements may be beneficial as well as considering entering through beneficial partners further opening other opportunities.
Review and define your Import and Export strategy based on a variety of considerations. Change how you Import or Export. Consider the benefits of different channels or country routings.
In summary
Considering the 3 x main points made will be a good start to making the right decisions for your business. Remember ‘one size does not fit all’ - We specialise in tailoring solutions to specific organisations with an outcome in mind. These often cover the following points made in this blog
Supply chain mapping
Supply Chain review - Agreements and Specifications
Managing change within your Supply chain when “Importing and Exporting”
There are of course, many other additional elements to cover such as Logistics, Warehousing, Packing, Documentation etc. Which we cover as required to suit.
Contact us for tailored support for your organisation
We help with the next steps and keep your business on track
Surviving supply-chain disruption
