Reacting to Supply Chain Changes

Following the fallout to the COVID-19 pandemic, recent US trade wars, Brexit, a change at the helm of the World Trade Organization, significant new trade agreements like RCEP and the TCA; the incredible volume of supply-chain changes in international trade shows no sign of slowing down. So how to companies, working in a social-distant world react to these supply chain changes? How does each business overcome these challenges and how will each sector respond?

When faced with such adversity, the Kwayga team have learnt from Tony Robbins who has said that “the quality of our questions determines our success”, so the questions to consider when reacting to the above supply-chain changes are;

One of the first aspects to consider is:

• are these just teething or short-term problems, or

• are these permanent challenges

Some supply-chain changes will last forever, while others are just a blip with some inconvenience for a short period of time. Before embarking on a supply-chain overhaul, take a step back and determine how long this new trading environment will last. As if these are teething problems which happens with new Trade Agreements for example, you will have to work them through; you will have to work through with your existing suppliers and may have to consider adjustments to protect margins so ensure you speak with your customers first and understand how they are impacted. However, if these are permanent challenges, you need to look at all alternatives. That is the key catalyst here for transformative supply-chain changes. Do not react just based on a recent trading month or possible quarter, but look at this in terms of longer term and figure out, are these teething problems, or are they going to be a longer-term issue for your business?

The next thing is to consider whether the recent supply-chain changes are fixed, or whether there is going to be further changes to ease or magnify the problems. For example, in the first few months of the EU-UK Trade and Cooperation Agreement (TCA), there have been a number of easements implemented by politicians on both sides of the Agreement, which creates both positive and negative impacts to certain industries. So with such easements, you need to consider:

• are there going to be further easements, to look at these challenges and issues

• how can you lobby your industry body, your Chamber of Commerce, your local politicians etc. to enable further easements to severely disrupted supply-chains?

The key point here is do not make a strategic plan or business change to your operation based on something that may change in the next couple of months.

The next thing to look at is can you make supply chain changes to overcome these challenges? Ask yourself, what can be done to circumvent or mitigate these challenges? You should consider changes to your supply-chain to ensure you can continue to serve your customers profitably. Many alternative supply-chain strategies exist, ranging from straightforward to difficult decisions, while overall they are summarised as follows;

· Change Incoterms + Responsibilities.

· Change Routes, Ordering + Storage.

· Change Raw Materials + Inputs.

· Change Freight and/or Customs Agents.

· Change Production Process.

· Change Roles or Upskill Staff.

· Change Sources of Supply.

With regards to the final point here about changing suppliers, this can be a difficult task but bear in mind the primary principle in Procurement is to have the right product (or service) available to you, at the right time, from the right supplier and at the right price, so embarking upon that journey may be the wisest strategy for your business, and hence the existence of to simplify this step for all businesses.

The next thing is to look at the opportunities. Does your specific supply chain create opportunities? As per our insights last month, in the midst of every crisis, great opportunities lie ahead, some industries and businesses thrive following upheaval to particular supply-chains, while others are paralysed under the weight of change. Carefully consider your Competitor Analysis following the fallout of major supply-chain changes as may have easy access to goods and product, where your competitors do not. Looking at these opportunities, is there something that you can build upon in the midst of the crisis facing those around you?

The last major question I would ask with regards to your supply chain is what role will your current or future suppliers play?

  • What role will your current suppliers play in your future plan?
  • Do you need to look at alternative/future suppliers?

The answer to these questions are never straightforward but were summarised beautifully by the Clash in the song they had 40 years ago (even though I don’t think they were talking about supplier management when they asked!!)

Should I stay or should I go now?

If I go there will be trouble

And if I stay it will be double

So come on and let me know

Should I stay or should I go?

That is a key question asked by many businesses during and after a major supply-chain disruption. Should we continue working with our existing supplier(s) or should we look at alternatives? Thankfully it has never been easier to find verified and trustworthy alternative suppliers. Incumbents hold a lot of sway but with smart supplier sourcing tools like, the ‘stranger danger’ risks have been completely eroded so join Kwayga for a free trial today, or take 2 minutes to view this introductory video:

e-Sourcing & Procurement Professional; reducing costs, risks & time associated with purchasing + Brexit Author & Speaker