After two years of supply chain crisis, companies are looking for ways to build resilience. However, as the pandemic subsides, new challenges are on the horizon, making this transformation even more urgent. Analysts say that in the future, supply chains need to become more flexible so that organizations can survive in an increasingly volatile environment.
Technology aimed at the Purchasing sector It is very useful for managing costs, workflows and suppliers, ensuring that sourcing strategies, spend analysis and supplier management are carried out more efficiently. However, for companies that need to build resilience in their supply chains, it is necessary to go further to ensure greater visibility in relation to their suppliers, going beyond the risk analysis focused on tier 1 suppliers and reaching other levels. To do this, they need to have access to reliable data, coming from the most diverse sources.
Risk management at the heart of business
Risk management has become a fundamental role for the health of businesses, and the focus of the strategy is to create mechanisms to protect the supply chain and ensure business continuity. No matter what challenges need to be overcome, building resilience allows companies to gain competitive advantages and also makes decision-making more assertive.
Although the concept may seem simple, several factors contribute to making the more resilient supply chain, from relationships with suppliers to reducing or expanding this network. In addition, building resilience varies from company to company; for example, companies that depend on a very large inventory have a different strategy than other “just in time” companies.
How to build resilience to face crises
Many supply chain management solutions only provide visibility to tier 1 suppliers, not considering other suppliers that may also impact the supply of inputs for production. On the other hand, companies are looking for solutions that allow them to generate actionable insights to reduce the risk of disruption in their operations. This involves:
Analyze prices and availability
Modern solutions allow you to analyze prices and availability in real time, which makes it easier to create strategies for build resilience in times of crisis. Having access to this information allows companies to quickly adjust their purchasing strategy as prices, availability and delivery times change. This transparency is essential to understanding the volatility of commodity markets and enabling smarter decisions to reduce costs and risks while new business opportunities emerge.
Risk management
The pandemic has shown most companies how a crisis can impact their business, from the lack of a simple screw to more complex and expensive components. As a result, they have understood the need to rethink the requirements for the design of their products, analyze the potential risk of a production interruption and how to overcome these challenges. New technologies seek market information to classify the risk of each input used, allowing users to observe fluctuations in demand, life cycle, prices and other issues that could cause an interruption and seek alternatives to mitigate them.
Social Governance
Pressure on companies from their own customers and regulations regarding social governance (ESG) – carbon emissions, working conditions, diversity and sustainability – is leading to deeper scrutiny of their suppliers to understand whether they meet the requirements of modern business. Transparency and accountability are increasingly important to building resilience in the supply chain.
Supplier management
Working with outdated, static data is a factor that contributes to friction in communication with suppliers. Therefore, the Purchasing department needs to work side by side with each partner to collect data that allows for more reliable forecasts and to reduce the risk of a problem impacting production. And technology is an important ally in collecting data in real time and making the relationship stronger.
Data is essential to building supply chain resilience and sharing information needs to be seen as a two-way street, with both the company and suppliers working to increase visibility across the supply chain and eliminate information silos.
Supplier diversification
Finding new suppliers is essential for resilience, as it reduces the company’s dependence on sourcing components from a single partner and location, in addition to meeting unexpected spikes in demand. This does not mean creating a war in the search for the lowest price, but rather having options that allow you to maintain operations even in times of crisis.
Analysis and forecast
Data helps analyze the market and generate insights into demand and supply patterns. Through advanced analytics and AI-based systems, the Procurement sector can reduce risks and uncertainties throughout the supply chain.
Building resilience is all about the need to quickly adapt to unexpected factors that pose risks to the business. Of course, it is impossible to eliminate all risks, but with the COSTDRIVERS help Your company gains the ability to deal with these challenges quickly. Discover our platform.