Scotland Excel


06 Jul 2020

The Opinion - The Scotland Excel Thought Leadership Series

The Importance of Robust Supply Chains Post Covid-19 by Nick Hyde

Thought Leadership

“Supply chain management is a delicate balancing act in these unpredictable times – on the one hand, there is pressure to keep the supply chain as cost efficient as possible, while on the other, it needs to be flexible and resilient in the face of unforeseen events.” (Reducing the Risk of Supply Chain Disruptions - Sunil Chopra and ManMohan S. Sodhi – iedp.com – March 2014)

During the current COVID-19 pandemic, most organisations across the world have experienced questions or concerns around the supply of critical goods or services. The pressure placed upon the normally routine supply of goods has been unprecedented in both business and everyday life. At times, the lack of essential goods being readily available, and the disruption of everyday services has brought the subject of ‘supply’ into sharp focus for the Procurement and Commercial sector.

The unprecedented rise in demand has brought more consideration than before about where goods and services come from, with previously robust supply chains being strained to breaking point. From a Procurement and Commercial point of view, this presents both a risk and an opportunity to better understand supply chains and ensure they are as robust and beneficial as possible.

The question we face now is around the short and long-term implications for procurement teams and the organisations they support. How do we ensure supply chains are as robust as possible and provide some suggestions for how we might improve?

Thoughts

Within the Procurement and Commercial profession, we are very used to discussing and considering supply chains and watching exemplar supply chains, for instance the automotive industry or the supermarkets, maximise the benefits being derived while minimising supply chain risk.

Is it time for the public sector to start considering how we learn from these exemplar supply chains and how we adapt our approach for maximum benefit to the public services we deliver?

As supply chains come back on-line as countries move out of lockdown, procurement teams will have a lot of work coming their way. Contracts will need to be modified and refreshed to reflect new ways of working and where and how goods and services actually come from must be at the forefront of our minds.

Commonly within the public sector a contract is let to a prime supplier and their experience and systems are tested to ensure they are as robust and suitable as possible to be awarded the contract, but what about their suppliers? Should we routinely engage these suppliers to investigate any unseen risk and opportunity?

Where we might start

  • Market Intelligence - use this stage to better understand where goods and services actually come from beyond the prime supplier.

  • European Single Procurement Document (ESPD) - strengthen the process to enable sight of suppliers behind the prime supplier.

  • Data Sources - use sources of data and information we routinely hold - like spend data - to enable stronger financial analysis to be undertaken.

  • Learn from the experience of other professionals in your field - many of your professional peers will have knowledge which could be useful to you. Look beyond the public sector to understand how private business establishes a robust supply chain.

  • Local Employment - even if the supplier is a national company, understand how many local employment opportunities they or their suppliers will provide in the service of the contract. Supplies have increasingly switched to local sources during the current pandemic, how do we learn from this?

  • Contract Management - use any contact management process to enable a conversation with the prime supplier regarding the strengths or weaknesses within their supply chains.

  • Critical Contracts - think about segmenting your contracts register to enable you to focus on those contracts that are critical to maintaining operations.