Supply Relationships: Managing the Strain of Coronavirus
Published: 16 Mar 2020
Average Rating: unrated
Author: Tim Cummins
The Future of Sourcing offers this advice in its weekly briefing: 'With Coronavirus wreaking havoc on communities and supply chains across the world, there has never been a more critical time in recent history to have reliable, trusted relationships with your suppliers. While AI is taking a more prominent role in managing and assisting with these relationships, the old-fashioned art of conversation - and collaboration - are still your best options to innovate.'
Barriers to collaboration
We are indeed all in this together, so there is every reason to agree that collaboration is the best way forward. But many may find that challenging. Here is why – and also what you can do about it.
- Many supply relationships today are not founded on collaboration, but rather on principles of self-interest. Constant pressure on price and battles over risk allocation have taken their toll. Simply uttering the word 'collaborate' is not enough to establish reliable, trusted relationships.
- There are going to be a lot of tough re-negotiations. There is so much uncertainty for everyone right now, we really do not know what supply delays and interruptions will look like, nor how many buyers will want to decommit from current contracts. Many organizations – and in some cases entire industry sectors – will be fighting for survival.
- Conversation and collaboration aren't easy when you can't travel. With travel bans accelerating at a dizzying pace, those 'trusted relationships' will have to be formed by virtual, not physical, conversations. That is not easy, especially with a workforce that is largely untrained in how to conduct virtual negotiation.
- Contracts today rarely contain the sort of governance and performance principles that support or underpin collaborative behaviors. In fact, corporate practices have driven the adoption of transactional, commodity-style agreements on a massive scale. Compliance and risk have dominated thinking, at the expense of relationships.
So what can be done?
IACCM has already been working on how to support the business community in these unparalleled times. Many people have already participated in our webinars or read the materials we are publishing. But we have grasped the critical need for practical interventions that go beyond advice and deliver know-how and impact, recognizing the constraints created by travel bans and working from home. During this week, we will be introducing a series of short, on-line programs and virtual workshops:
- Virtual negotiations: how to plan and communicate in ways that will support mutually successful negotiated outcomes, when face-to-face is not an option. On-line delivery of programs that teach effective use of video, conference calls and email as negotiation tools.
- Collaborative contracting: achieving collaboration depends upon increased definition and formality in the relationship – sometimes not just one-to-one, but potentially one-to-many. IACCM has converted its Relational Contracting workshop into an on-line series of moderated sessions.
- Supplier management: research shows that many organizations have limited visibility into even their tier one suppliers, yet understanding where visibility is needed and to what depth will be critical in these uncertain times. This on-line workshop supports segmentation of the supply base based on an assessment of relative need and purpose, enabling prioritization based on relative importance.
As IACCM CEO Sally Guyer explains: “These are just some of the many initiatives we are taking to keep our community connected. IACCM is uniquely capable of offering its members the chance to network, to share the ideas and experiences which can sustain not just the health of their business, but also their personal well-being”.
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