Right now, global manufacturers are purely (and understandably) in reaction mode to a pandemic that’s swept the world with unprecedented speed. Addressing emergency supply shortages and figuring out how to manage an entirely remote team are appropriate responses to this fluid situation.
It’s also time to recognize that the coronavirus is not a stand-alone event, but the continuation of a trend towards volatility, complexity and uncertainty. Consider that in the span of a few months we’ve gone from the brink of US-China trade war, to a global pandemic, to the start of an economic downturn. The coronavirus is an emergency, but it’s also an example of a systemic shock that will likely be repeated with increasing frequency.
This crisis can serve as a wake-up call for supply management to develop a new approach that’s agile and resilient. If we don’t go beyond war rooms and tiger teams to develop a system that detects risk events and recommends actions, we’ll inevitably face another emergency with limited options.
The New Role for Supply Management: Margin Protectors
The greatest opportunity for supply management isn’t becoming better at managing inherent supply risk, but in redefining their role and relevance to the company’s future. In addition to giving teams a better foundation for controlling costs, a new approach would give supply management a greater opportunity to protect and grow margins.
In volatile times and economic downturns, increasing product margins will be critical to driving growth for global manufacturers.
Although this is never an easy task, my experience as a sourcing operator and tech company founder suggests that with the help of cognitive technologies, many enterprises have room to lift margins by one to three percent.
A New Approach
A full, digital transformation of sourcing, procurement and NPI is required to build an agile supply management system, but issues surrounding culture, perception and organizational structure also need to be addressed. That’s why I’d like to present the opportunity facing supply management not as a process to adopt, but a set of beliefs to embrace: Supply Management In The Age of Volatility: A Manifesto
Supply Management as an Engine for Growth
While no one welcomes the coronavirus or risk events that’ll follow, supply management has a unique opportunity to showcase their value by driving growth despite an economic downturn.
Sourcing and NPI teams will face an incredible amount of pressure, but the technology to help them drive their company’s next stage of growth is available now.
Rajesh Kalidindi
Founder & CEO
LevaData