Coronavirus is a Wake-Up Call for Supply Chain Management
Many companies and leaders talk about the need to do supply network mapping as a risk-mitigation strategy, but they have not done so because of the perceived large amount of labor and time required.The most common approach is to use the bill of materials and focus on key components. It typically starts with the top five products by revenue and goes down to their component suppliers, and their suppliers, all the way down to raw materials suppliers. The goal should be to go down as many tiers as possible, because there may be hidden critical suppliers the buying firm is not aware of. You should also include information about which activities a primary site performs, the alternate sites the supplier has that could perform the same activity, and how long it would take the supplier to begin shipping form the alternate site. Also, people from procurement, logistics, and supply-chain financing need to come together to talk about what key gaps need to be fixed to protect the company from disruptive events in the future and how to align the goals of procurement with the overall business objectives. Firms should also incorporate disruption-related metrics in their evaluations of suppliers.