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Procurement

6 Secrets to Successful Procurement in a Crisis

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During the beginning of the pandemic, many essential businesses had to deal with sudden jumps in demand while unsnarling problems in their supply chains. Unsurprisingly, procurement departments came into the spotlight during this time, with SRM (supplier relationship management) taking center stage.

Kellogg’s needed suppliers to ramp up production and increase COVID-19 safety practices right as the pandemic added financial burdens and supply chain delays. As an essential business, Allstate Insurance had to ensure they could still get the products they needed to branches while navigating quarantine restrictions in multiple countries. Here are some of their key takeaways:

Keep Strong Relationships with Existing Suppliers

The golden rule saved Kellogg’s from many pain points when the pandemic began affecting supply chains. Their strategy involved working toward common goals with suppliers, instead of pressuring or dictating to them. During the crisis, suppliers had multiple customers with increasing demands while their own production was limited. They prioritized Kellogg’s because of their strong relationship. 

Talking on the phone with suppliers helped improve relationships, but it also worked as a litmus test. Kellogg’s procurers knew suppliers should be willing to pick up the phone even when they had bad news.

Fewer Is Better

Part of the strength of Kellogg’s supplier relationships came from narrowing down large numbers of suppliers so they could build more secure relationships with key suppliers. They focused on the top suppliers in their segmentation model, although they also built relationships with some lower-level suppliers during the crisis.

Help Your Supplier Too

When supply chain disruption came, Allstate reached out to find out which of its small and diverse suppliers were struggling and offered them help. The company provided aid with federal and local financial resources and made plans with suppliers for COVID-19 prevention measures and financial issues. Allstate advised and worked with its smaller suppliers to help them survive and grow so they could deliver what was needed.

For larger suppliers, it was also essential to find a meaningful way to acknowledge them. Kellogg’s had company leadership recognize them for their services.

Transparency Improves Relationships

Transparency helps speed up processes and build trust. Waiting until the weekly or monthly meeting with suppliers to relate important information wasn’t fast enough. Telling their suppliers right away enabled the companies to react faster and make better-informed decisions.

When supply chains were affected by COVID-19, Kellogg’s had to build strong relationships quickly with new suppliers, as well as strengthen weaker bonds with lower-tier suppliers in their segmentation. Transparency and flexibility were their most effective tools.

Acknowledge Supplier Expertise

Suppliers are specialists in their fields, so Kellogg’s tapped them freely for expertise. Asking their opinions and developing solutions together helped them make more prudent decisions. It also increased each supplier’s ownership of the problem and motivation to solve it.

Building Toward a Better Supply Chain

Because of the significant supply chain problems during the pandemic, procurement departments across all companies have had the chance to prove their value as a vital part of every business. The procurers at Kellogg’s and Allstate were able to accomplish what they did because they had strong leadership support, and they continue to advocate for their function in the company.

Allstate especially advocated for a strong procurement department through three strategies:

  • Communicating in an effective manner how procurement performance positively impacted the company
  • Getting people in other departments involved to increase buy-in
  • Developing advocates for their issues outside of the procurement department

Building up this support enabled more resources so SRM and other plans could be better implemented during the pandemic, weaving a safety net for both companies when COVID-19 hit supply chains.

 

Image Credit: goodluz / Shutterstock.com

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