Managing Crises Caused by Supply Chain Jam-Ups

In times of crisis, breakdowns start in supply chains. The fact that the starting point of the pandemic is China, which is shown as the supply chain source of the world, caused serious breaks in the supply chains in almost all sectors. Although the return of life in China to normal with strict quarantine measures is earlier than in other countries, serious losses have occurred in production. Similar to the breaks in this supply chain that started in China, the Covid -19 has spread to Europe and has emerged as a second wave in Europe-based supply chains. Each of these breaks in the supply chain come as an urgent and important supply crisis that procurement units should get involved in their agendas.

Working closely with internal customers consist of planning, material logistics, production, quality and R&D units, managing suppliers efficiently and agile according to the revision plan or requirement notifications from these units is among the most effective short-term actions to be taken. In this context, intervening in every ring where the chain between suppliers and internal customers is observed to be weakened and ensuring the sustainability of production without breaking the chain is an important agenda item for purchasing units in crisis periods.

Purchasing units play a critical role in the supply chain, opening up the blocked processes from suppliers' sub-suppliers and even their raw material suppliers to main industrial production. Until the processes are under control, purchasing units will have to manage more than one crisis every day. They should take the following actions in order to successfully manage these crises and overcome the process with the least possible loss (production stop, cost increase, etc.) :

• Establish purchasing unit emergency response teams.
• Ensure that supplier finished product, semi-finished and raw material stocks are made visible.
• Establish a risk management unit within the purchasing departments. This unit will detect risky suppliers and keep them on your radar with supplier risk analysis and modeling, and with the proactive actions they will take, they will intervene many problems that are still premature with a crisis at their source.
• Prepare yourself for Demand - Production Drop. The purchasing unit, while trying to prevent backlogs in the main industry, should closely monitor the situation of suppliers who may experience financial difficulties due to material stocks, postponed and canceled orders, on their behalf.
• Prepare yourself for the sudden increase in demand. Just as you need to use force to slow down a moving object, you will need to use force to speed up a slow moving object. To overcome these difficulties, purchasing units should start organizing their suppliers according to possible capacity increases before reaching the bottom of the V curve, which symbolizes the demand crisis.

With this awareness, it will be a proper policy for company management to support purchasing units and show the value they deserve in company organizations and strategic planning. Remember that a chain is only as strong as its weakest link, and companies can only be strong in terms of the strength of their supply chain and their competitive capacity.