Questions to ask when managing supply chain through COVID-19 and beyond

Josh Guthrey   |   May 7, 2020

Whilst many countries and organisations are edging towards the next phase with recovery in mind, it might be a useful exercise to re-visit some questions that should have been asked a few weeks ago. And if they were asked, were there sufficient answers or solutions provided by technology?  

As Warren Buffett famously said: “Only when the tide goes out do you discover who's been swimming naked.” Without shared visibility of critical information and the ability to act fast – often due to inefficient, manual processes – organisations may find themselves exposed to unnecessary risks on top of COVID-related disruption.   

Let’s dive into the different 5 areas most relevant to procurement and supply chain professionals. These questions should form the basis for business continuity planning - if not for COVID-19, then the next possible disruption event. 

Supply risk 

Question Note/Commentary
What countries do your Tier 1, Tier 2, Tier 3 (and so on) vendors operate in?  There’s been discussions around reshoring and diversification
Which of your suppliers or vendors are affected by [crisis name]? What can you do about it? Learn about their business continuity plans to help with your business continuity as well. 
Are these suppliers or vendors financially threatened because of the current crisis?   
Does any of your critical categories have supply risks?   Find out if you only have a sole vendor for any critical categories. 
Are there any items/categories that have been affected by commodity pricing and longer lead times?   
Among the affected vendors, who are potentially unsustainable with regards to their practices as these practices may lead indicators to other risk factors?  Find the suppliers marked as ethical, social enterprise, Indigenous owned etc. in your supply chain. 

 

How Felix can help: 

  • Use Felix’s vendor tag feature to mark vendors who are available or at risk 
  • Broadcast important messages to vendors using the messaging tool 
  • Use Felix’s requalification and vendor questionnaire tool to gather supply chain intelligence 

Sourcing 

Question  Note/Commentary
How do you identify and rapidly qualify new vendors as needed (based on specific category and/or operational requirements)? Especially important to keep supply chain active for key projects. 
Can you involve all stakeholders for quicker project approval?  Teams are working remotely but collaboration is critical. 
Is there a way to expedite the whole procurement & supply cycle for new project?  An efficiency question. 
How do you manage vendor performance?   
What is the best way to engage and develop at-risk and/or strategic suppliers who are vital for business continuity? 
Supplier coaching might have been best done before the crisis, but it’s not too late to start now.
What is the best approach to split demand across multiple options which will help in maximising supply assurance?  Work out how many eggs to put in each basket effectively.  
How can you make the best award decisions amid changing business constraints?   

 

How Felix can help: 

  • Interrogate existing database with vendor tags 
  • Find new vendors within linked marketplace and add to sourcing events 
  • Configure approval and evaluation workflows to maximise efficiency 
  • Set up periodic/discretionary performance evaluations and appropriate criteria  
"Only when the tide goes out do you discover who's been swimming naked."
Warren Buffett

Fraud, probity, due diligence   

Question  Note/Commentary
Have you identified the supplier as a valid entity and is safe to do business with?   
Is the individual you are in contact with really part of the supplier organisation they are claiming to?  Distributed and remote teams on both sides. 
Can everyone in your organisation differentiate between a legitimate email/ invoice and a phishing scam?  We wrote about cybersecurity and IT-related risks as part of the COVID-19 series.
How do you quickly and safely set up new suppliers and fast-track payments?   
Are your suppliers price gouging and taking advantage of the current climate? Are they violating any contract terms?   
Have you considered limiting your sourcing to approved panels and revisited purchasing thresholds?   

 

How Felix can help: 

  • Tailored onboarding questionnaire to suit your organisation’s risk appetite while capturing key information 
  • Centralised database with configurable user permissions plus audit trail 
  • Vendor self-service portal with banking details validation prior to any change 
  • Set up panels and contracted rates  

Contracts 

Question  Note/Commentary 
Which of your company’s contracts have been affected by [crisis name]? What are the financial implications?  This applies to contracts on both the customer and vendor’s side.  
In what case/s can your company get out of an agreement using force majeure due to [crisis name]?  The last resort.  
Can you associate contracts with other critical data about counterparties (e.g. vendors, customers) and value chains?  This helps prioritise where to focus your energy. 
Can you plan ahead with contracts that may negatively affect your company in terms of performance obligations as well as renewals?   
Can you renegotiate and amend your agreements to help you through the crisis?   

 

How Felix can help: 

  • Central repository of contracts: No more wasting valuable time digging through emails and spreadsheets 
  • Leverage key data around contracts to perform analysis and take action 

Spend data, supply/demand analytics  

Question Note/Commentary 
How do you illuminate your supply chain beyond the first tier?    
How do you evaluate and compare the cost of multiple risk mitigation options?  Related to scenario planning and analysis. 
How do you understand the financial impact of vendor’s failure?   
What signs from the market should you look for to detect price swings? Is it a lone vendor’s action or a group reaction? 
Which categories/vendors should you tackle first?   
How do you evaluate individual supplier risk with data coming from multiple sources?    

 

How Felix can help: 

  • Centralised, up-to-date, single source of truth for vendor-related data 
  • Apply multiple supply chain segmentation strategies  
  • Gather intelligence from the vendor marketplace 
  • Pull vendor data from Felix into third-party software to perform further in-depth analysis via API 

Conclusion 

We have been echoing the view that COVID-19 acts as a wake-up call for supply chain and procurement management. Many of the lessons from the current crisis are not new and should have been learned from previous disruptions.  

Further reading: 

  • From a financial perspective: CFOs around the world agree that supply chain transparency and risk mitigation should be at the forefront 
  • From an operational perspectivesupply chain mapping is resource-intensive, but definitely worthwhile  

--- 

If you’d like to learn more about how Felix can help, don’t hesitate to reach out. 

Josh Guthrey
Josh Guthrey is an Enterprise Sales Executive at Felix. His passion is helping Australian construction, mining and utility companies implement a culture of responsible spending by improving their vendor relationship management, sourcing and contract management activities.
Follow me:

Related Articles

Risk mitigation
Procurement & supply chain teams urged to learn from Australia’s recent underpayment scandals

Top retail executives have blamed offshore software not configured for “Australia's relatively complex labour environment as a key factor in staff being underpaid.”  

Risk mitigation
Business continuity: Steps to keep your supply chain moving amid COVID-19

Three weeks on since we first wrote about the novel coronavirus. Back then, the number of global cases was nearly 200,000. That has now jumped to more than 1.7 million.  

Over the course of our business continuity blog series, we’ve shed light on inefficient procurement tools, and illuminated the IT and cybersecurity pressure points amid the remote work boom.  

Technology
Q&A recap: Accelerating a business case for digital procurement post-COVID19

The following is a recap of the Q&A section from our live webinar on June 11th. I spoke with Ross Darrah, Founder & CEO of Pareto Toolbox. The interview has been lightly edited for clarity.

Like our content?

Be the first to know when we publish new insights.