How procurement can help establish resilient supplier networks

During the past year, the need for more resilient supplier networks has steadily risen to the top of every CPO's importance list.

Managing suppliers closely and with the help of the right tools can help anticipate problems, predict market tendencies and possible issues, and identify inside risks and vulnerabilities on the supplier network. If the organisation can quickly identify, re-evaluate, and take faster decisions it can help diminish the risks to almost zero.

Procurement teams are now taking a very active role in helping to create resilient supplier networks and many are starting to realise that it shouldn't just be confined to their strategic areas. 

What does a resilient supplier network look like?

Some professionals agree that the first – and probably most important – step to have a strong supplier network is by having visibility. Pranav Padgaonkar, Senior Director Consulting at GEP, gave an interview for Procurement Leaders in late April speaking about the importance of visibility: "Supply collaboration used to be talking with suppliers and securing next year’s supply, a collaboration that focuses on visibility now incorporates collaboration activities in areas such as capacity planning, master data, and quality inspections”. 

A great opportunity for procurement in playing a key role in this is by getting the ownership of tail spend and bringing to the table the opportunities that the smaller purchases and smaller suppliers can have. 

Usually, it is only strategic spend gaining the spotlight when it comes to procurement identifying and managing possible risks, leaving smaller suppliers within the tail unmanaged with many of these suppliers still playing an active role in the overall supply chain.

With suppliers in the tail making up around 20% of their annual spend, it's a gap that needs to be covered if the intention is to keep the whole supply chain remaining strong when times get rough.

Visibility isn't everything

Although visibility is important, it isn't everything. The processes and policies need to be very structured so professionals working actively on supplier networks – and the suppliers themselves – can fully understand what's a priority and where the opportunities are. 

Only the data is not enough, it needs to be very well analysed so the next steps taken by the organisation are not only based on how to prevent future risks, but also on what will be the real impact. Only then will they have a supplier network capable of predicting hard times along with the capacity to better overcome them.

And as Jennifer Bisceglie, CEO and Founder of Interos said: “What better time to be in procurement than now? Your responsibility and the people asking you questions have risen to the board level. Procurement is now first in line to protect the company in a crisis and that should excite all of you.”

To find out how Maistro can bring tail spend in your organisation under control, leading to better resiliancy in your supply chains, get in touch.

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