Build your resilient procurement strategy

Have you ever faced a situation where a commercial team has made a business commitment, but the back-end supply chain is not yet established?

In these cases, the onus is often on the procurement department to ensure uninterrupted supplies. Unfortunately, examples like these are becoming more common, as business requirements change and commitments to sustainability increase.

Under the circumstances, procurement professionals are opting to shift arrangements to fix the gap. Altering prioritization of a company's product mix, sharing long term forecasts, or onboarding alternate suppliers, are common short-term tactics.

However, to build a resilient procurement strategy, companies also need to tackle these situations from a mid- and long-term perspective.

Involving procurement professionals during the design phase of the product can help ensure the supply base that’s needed for the product’s success.

If a restaurant chain is looking to add a new item to the menu, getting the procurement team involved early can help to work with suppliers to set key KPIs upfront. Even during a crisis, steady and hassle-free supplies require well-coordinated lead times, minimum order quantities, and an adequate number of suppliers to be qualified upfront.

Companies need to go back to the drawing table on make-versus-buy decisions for key items and products.

Semiconductor shortages have taken the entire industry by storm and companies are considering setting up their own semiconductor fabrication plants. It shows how previous decisions to "buy" products may not hold up in a shortage environment.

Even in less supply-tight environments, make-or-buy decisions can and should be continually reexamined. If a company is looking to venture into a new category, it may go for a "buy" strategy with a third-party manufacturer to test and learn about the new category’s performance. If the product does well, the company could choose to switch to a "make" strategy.

Supplies are currently the weakest link in the chain for most companies. Procurement professionals looking to build a resilient supply chain need to take this as an opportunity to revise corporate strategies with a long-term perspective in mind.

Source: https://www.supplychaindive.com/news/supply-shortages-six-tips-build-resilient-procurement-strategy/606658/