In the recent past, traditional procurement has been changing course along with AI, focusing on making non-apparent actionable insights visible. However, as we know change is the only constant! What was probably not important a few days back, has suddenly gained importance. The current Covid 19 situation is challenging the status quo and we are all feeling entrapped.
Industries across the spectrum are bearing the heat. Not only manpower, but the availability of goods to keep the industries running is a challenge. A major reason for this is the broken supply chains attributable to Covid 19. The sourcing and procurement function is facing challenges – now more than ever! A lot depends on the ability of vendors to keep the supply lines running.
Organizations may depend substantially on a specific set of suppliers for procuring certain goods. These suppliers have been a part of the empaneled list of organizations. What happens when these suppliers delay their deliveries, or even worse, fail to deliver? Due to the outbreak of Covid 19, lockdowns have been implemented across the world that has affected supplier capability to deliver goods at several locations. This in-turn has hampered businesses severely. Organizations across the world would have to face this unprecedented situation and devise action plans to tackle it.
Organizations need a way to quickly distinguish using the available data on hand, which suppliers are most affected versus those who are not. If the supply of specific goods from specific suppliers is at risk, it is important to adapt and leverage existing relationships with other suppliers to the maximum extent possible to keep the supply lines running. How can this be done?
Here is a solution! We bring you ignioTM Cognitive Procurement.
Our solution helps procuring enterprises analyze the spend on categories and items before and during the crisis to reveal the ones at high-risk due to an exposure to a single or a small set of vendors. This analysis can also help evaluate if the strategic vendors with a high wallet share are really living up to their tag. Based on these insights, you could take a call on strengthening your relationships with them, or search for alternate suppliers who are showing more resilience during this period of crisis.
We believe that onboarding new suppliers at a time like this would bring in more uncertainty and elevate risk. Large organizations have a detailed process to onboard a new supplier which cannot be done overnight as the process is time and effort intensive. So, only after you have exhausted all options of sourcing goods from your existing supplier list, is when you should consider new and untested suppliers. Our Vendor Concentration analysis can help you identify alternate vendors from your list who could serve as alternate suppliers during these uncertain times.
This will ensure that while the rest of the industry might be grappling with shortages, your operations can continue without any hindrances.
Let us consider an example here. Pharmaceutical industries have been facing shortage of packaging equipment as quoted by T Sathish, the Vice-Chairman of IDMA (Indian Drug Manufacturers Association) in this report by The Economic Times – “We are facing a shortage of packaging material due to the nationwide lockdown and closure of several industries. Our members spread across the country are operating the production units with 40 percent workforce,” Sathish said.
In such scenarios, the pharmaceutical company can identify the strategic vendors from the existing pool of suppliers empaneled with the company – who are likely to deliver as per the need and demand. This can be achieved using ignioTM Cognitive Procurement. Similar scenarios could arise in several organizations across industries such as retail, manufacturing, etc. who deal with multiple vendors for procurement of several goods. Amongst the available vendor list, reliable vendors could be easily identified.
Another report on managing suppliers during the Covid 19 crisis by Onspring states that, “Put vendor risk mitigation plans into place now. These plans should be broad enough to provide overall coverage across supplier tiers, while also enabling ‘drill-down’ views into high-risk areas. Your focus is to identify vendors that could negatively impact your most important business units, systems or products.”
Identification of such vendors is the key here which causes the highest impact on the business. So avoiding such vendors and revaluating existing vendors is of utmost importance. While we all fight the war against Covid 19, ignio Cognitive Procurement is a solution that could help by finding alternate vendors for procuring high-risk items which eventually brings some solace. Give it a try!