What the coronavirus has taught us about supply chain management (yes, really)

Coronavirus is testing the global supply chains as we’re witnessing a real-life experiment on how a virus outbreak can affect the economy in a matter of days. The stock markets are falling, whole cities are on a lockdown in Italy, and China, the largest exporter of goods since 2009, is closing its offices, stores, and factories. 

This emergency situation has brought out many bottlenecks from the way global manufacturing is distributed, to unparalleled effect on the airline revenue. Let’s take a look at what we can learn about supply chain management and procurement in the light of these recent events. 

There’s a good reason China is called the “Factory of the world”. In the last 18 years, the relative importance of China in the worldwide economic ecosystem has increased tremendously. Today, almost every supply chain is connected to China in one way or the other. The current situation has raised a question if the global economy is overly dependent on Chinese supply. 

There are no quick solutions for that - finding and ramping up new suppliers in other countries can take years. Also, as the coronavirus is affecting countries from Asia to Europe, there’s no guarantee that the same thing doesn’t hit suppliers regardless of their location.

Both the suppliers and the procurement teams need open communication 

The times are challenging for both the suppliers and the procurement teams. Procurement teams are constantly monitoring the suppliers in the most affected areas. They need up to date information on PO statuses and order confirmations to make sure the order has been received and will be fulfilled accordingly. 

If they can’t get the confirmation, it can either mean that the order hasn’t reached the supplier or the supplier can’t confirm it for some reason. It’s likely that the supplier themselves are unsure if they can fill the order, making it risky for them to give out those confirmations. 

Even if the suppliers are still operating, the situation might inhibit their production capacity. This can quickly deplete their stock reserve and yet again put filling orders at risk. In this case, it’s also important for both parties to have a mutually clear understanding of the situation. This way the purchasers can see critical shortages coming and start damage control as soon as possible.

So how can you pandemic-proof your supply chain? 

The short answer is that you can’t. But you can make sure you catch on to possible supply problems as early as possible. There’s a lot of uncertainty affecting both ends of the supply chain so this can only be achieved only by constant communication between the procurement team and the supplier. 

Traditional email and Excel-based processes may work well if the business runs as usual, but in cases like this, keeping on top of the situation can become borderline impossible. Monitoring the supply chains and having constant communication with a large number of suppliers requires a lot of handiwork which can quickly lead to human error. 

Specialised procurement software, on the other hand, is much more capable in a situation like this and gives you: 

  • automated effective lines of communication, 
  • constantly up to date and accurate information, 
  • a clear overview of the situation, 
  • an option to converse simultaneously with a large number of suppliers.
  • remote work capabilities

ProcurementFlow helps you communicate with a vast number of suppliers quickly and efficiently. The collaboration feed gathers all relevant communication in one place, including email replies, so you can instantly get a complete and real-life overview of the situation. 

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