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It’s well known that the Pandemic brought a new set of challenges for the supply chains at a global level reason why we should implement the necessary adjustments to our strategy and tactics to continue performing in an excellent manner.

I propose the following set of changes to be implemented this year as a response to the trends happening globally, probably you’ve already implemented some of them (great if you have them all already!) but nothing wrong in having a list that can help you to cross check if something still missing, right?

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As mentioned in my previous article regarding 2022 trends in Strategic Sourcing (here), one of the main concerns for any business is to secure the supply of the required materials to ensure business continuity, this concern goes in 2 different directions, one is to make sure you have the right supply strategy (and the right relationship with the suppliers) and the second one is to ensure an on time freight, none of them being less challenging.

I’m stressing the part of Cultural Change that should go from Top to bottom in the organizations as we all need to understand that the current value that Strategic Sourcing and Logistics areas can bring is to ensure business continuity, meaning that lowering cost (former value proposition) should come to a second place as we need to focus on strengthen our partnerships with our supplier base and our logistics business partners; this doesn’t necessary mean it would automatically be more expensive, but we need to understand current scenario where freight tariffs reached historical maximums and we are still dealing with scarcity of some materials or components (i.e. microchips), organizations must accept it and design a proper business strategy to keep business running at the best possible cost. Remember that nothing costs the business more than the inability to serve its customers.

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By now you must probably have already done this, but better to double check. It is imperative to review your sourcing strategy in the sense that for those 20% of materials that represents the 80% of your spend you should check again your suppliers’ capabilities and to run a risk assessment to identify those areas where you must probably need to increase the number of suppliers, research on new alternative materials and decide on a better supply location if possible. Sourcing flexibility may lead to increase your supplier base or to change suppliers from far away to local suppliers or “nearer suppliers” to avoid the challenge regarding freight availability.

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We know that the evaluation we usually do to our main suppliers (Supplier Relationship Management) is generally based on factors like Cost out, cash in, quality and innovation, you might want to review such SRM’s now and check if the weight you have for those metrics is adequate to today’s conditions and needs or if you need to have a talk to your supplier in order to agree on different priorities (secure supply!) and actions leading to a better and closer collaboration that allow us to take the right measures on time to keep business running.

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This is obvious but your Risk Management Plan must be updated, you need to make sure that your plan reflects the possible consequences of a pandemic, from scarcity of materials up to availability of your own personnel, what would you do to keep business running?

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This is the time to seat with your IT partner and IT senior management in order to review your SC Technology Roadmap, while it is true that areas like Procurement are focus on implementing procurement technologies (Procurement to Pay) and Logistics with strong focus on better inventory and order management systems; all these efforts go in the same direction of automating operational activities (which is good), but you should start thinking how to adopt new technologies such as artificial intelligence (AI) and Machine Learning (ML) not only to improve your operations but to get real-time insights to make better strategic decisions and implement on time mitigation actions to keep your business running. I’m not saying you must adopt these technologies right now, but it is important to evaluate them to understand the potential they have to support the flexibilization of your Supply Chain.

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One of the main concerns currently for many organizations is regarding procuring and

securing affordable freight capacity, and we are not talking only about maritime transportation with all the known challenges we are facing, we also talk about ground transportation as it seems the carriers are very cautious in fully rebuilding anticipatory capacity. Also, we have seen in many countries the lack of workforce to cover the current demand. It’s time then for you to review your inbound logistics strategy, considering maybe long-term contracts, looking for stronger partnerships with your main carriers, consolidating volumes and balance that out to the right number of carriers your company needs.

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This might seems a bit redundant, but it is critical to understand that we should focus our efforts in doing a better planning within all stages of your S&OP (or CPFR), need to review if you have the right talent and the tools in order to close the gap between the real demand coming in vs your demand forecast, you should also review the processes to define if they are updated and covers the current need of having a more flexible Supply Chain capable to react immediately to changes in the environment, so your focus on this is to review people, processes and tools, are they helping me to keep up with the current challenges?

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These are the main changes I see for 2022 that Supply Chain should start making, evaluating and including as part of their strategy and tactics, all for the sake of keep business running!.