How CEOs of mid-size companies should think about their supply chains during any crisis
As CEOs grapple with managing through the current economic volatility wrought by COVID-19, another area we dive into in this series of articles is supply chain management.
My collaborator on this subject is Juli Lassow of JHL Solutions who spent her career at Target, Inc. in Merchandising and Global Sourcing roles. Juli now helps companies plan and navigate the intricacies of a modern supply chain and adjust strategy during times of change.
B2B Companies may need alternate suppliers
Economic volatility impacts large and small companies alike and your go-to suppliers may not be able to deliver when you need them most. CEOs should ask “Can we wait it out” (until our trusted partners can deliver)? It’s the right initial question because these are partners that you have worked with and trusted over the long term – you don’t want to disregard them. Leverage your back-up supplier while staying connected to your original partner to understand their progress back to ideal performance, and help them if you can.
- Use a Values + Metrics approach when seeking new suppliers
If you must make a change or you don’t have a back-up supplier to turn to, go back to the basics when seeking out new partners, remembering that a great supplier is a true partner. Ask:
- Why did you choose your original supplier?
- What were your shared goals and values for the partnership?
- What is the promise that you deliver to your customers and how does this partner help you deliver on that promise?
- What makes you unique and what do you need your suppliers to do to deliver for you every day? (fastest shipping, lowest price, most innovative product?)
- How does that partner deliver on this promise? (What are the credentials, capabilities and capacities needed to deliver?)
Finding the right back-up might take some effort, but in the long run you’ll have a great supplier who aligns to your specific needs and keeps you in business until your long-term partner returns to full capacity.
B2C Companies are probably facing new disruptions
With stay at home orders and personal quarantines, B2C companies are experiencing a huge shift in consumer behavior that is disrupting supply chains like never before. For many, customers aren’t purchasing at the same volumes they were previously, impacting multiple areas of the supply chain.
- Re-assess your market needs to determine how to redeploy the assets you have. Leveraging the assets you own is simply smart business. Recent good examples of this include restaurants that were forced to close their dining areas shifting to provide grocery services to their local communities. Also, hotels that offer “day rates” to professionals working remotely, creating a quiet, private, co-working space with great internet connectivity – and a convenient place to take a quick mid-day nap!
- Reposition your offerings to meet emerging or accelerated demand You may be fatigued by the over-hyped notion of pivoting, we’ve all applauded vodka distributors who shifted to making hand sanitizers addressing growing product demand. When executed strategically, a pivot can deliver much needed product and also enhance your bottom line. Succi, a domestic clothing manufacturer, shifted production to PPE (an emerging need) while simultaneously building out infrastructure to their digital design platform. This foresight and investment now allows designers and retailers to collaborate remotely on clothing design with less waste – capitalizing on an accelerated trend seen in retail.
It’s critical to assess your supply chain’s vulnerability and make plans
In a recent Harvard Business Review article, James B. Rice, Jr. advocates for and outlines how to assess factors impacting most supply chains. His “employees first” planning focus is spot-on and a timely reminder that your people are your most valuable asset. In addition, looking at macroenvironmental changes is a discipline organizations need to build into their annual plans. The U.S. – China trade situation, Brexit, a global pandemic are all great examples of how our global economy may impact a company’s ability to deliver to its customers. When it comes to your supply chain, scenario planning is critical to your long-term growth.
About our Authors
See Aurora's bio below.
Juli Lassow is the owner and principal of JHL Solutions, and is known for delivering sourcing and negotiation strategies that enhance sales, profit, and collaboration. Reach her at hello@jhl-solutions.com.