It feels like each year since 2019 has been a bear of a year. Few business functions felt the effects of COVID-19 quite like supply chains, and none are still reckoning with the second- and third-order impacts of the pandemic in such concrete terms. But as we reflect on 2022, supply chain leaders have a few hard-won kernels of wisdom to take with them into the uncertainties of 2023.
Let’s review the lessons 2022 revealed –or hammered home—for the supply chain industry:
When COVID struck, business continuity planning (BCP) was frequently more focused on keeping the internal gears of an organization moving in the case of an absence or hiccup. No one was watching the supply chain. Then the pandemic hit and suddenly, the vulnerabilities of supply chains became clear to every toilet paper buyer on the planet. But even as organizations struggled to find new vendors, new shipping methods, and better transparency through 2020 and 2021, it seemed they were hoping for an end to temporary struggle instead of adapting fully to a new world order. Then 2022 arrived with the war in Ukraine and hopes of a ‘return to normal’ were dashed. In 2023, business leaders will understand the need for BCPs that account for the whole of the supply chain and the full scale of potential disruptions that can occur.
When headwinds are strong, organizations have to reduce costs somewhere. Procurement departments (aided by spend management solutions like Coupa) can be a secret weapon for reducing spend when times are tough – but they can’t do it if they haven’t invested time into healthy supplier relationships. Organizations that keep a close eye on spending, make procurement plans and stick to them, and keep the lines of conversation open with their suppliers can achieve cost reductions that don’t involve layoffs or other difficult choices. As a result, companies that have a solid understanding of their supplier landscape will be better positioned to succeed in 2023.
Just when the world began to relax following the pandemic, war in Ukraine threw a wrench into plans to ‘return to normal’. Between gas prices, grain shortages, and global tensions, the war in Ukraine was a stark reminder that we live in an increasingly global world. When a thread is pulled on the delicate web of global supply lines on one side of the world, the tug is felt strongly on the other.
The SEC proposed rule regarding ESG disclosures is just one more piece of evidence that ESG initiatives and values are becoming an established part of the business world. Consumers and investors alike want to know your organization upholds their values—and a little green leaf logo won’t cut it anymore. Savvy investors and even government regulators are asking for proof down to the vendor level that your company practices the ESG values it preaches.
Suppliers have gone from being unseen to being under a microscope. Successful supply chain and procurement professionals can mitigate the risk of an interruption by expanding their supplier onboarding and management practices to better validate prospective suppliers’ financial viability, delivery capacity, and ESG score. There’s also an element of “trust but verify” to this process—and a broader adoption of contingency planning for each supplier—that may not have been as pervasive in years past. Companies are also asking for more from their suppliers in terms of commitment and prioritization—or least information about where they stand.
The importance of good data and analytics cannot be undersold. Companies need a holistic digital view of what’s really going on, or they’re at risk of being caught off guard by the next crisis. This means connecting everyone, everywhere in your supply chain with the right information in real time so that they can utilize the most current data to deliver the most accurate forecasts to make the right decisions. No more blind spots, no more lagging—just agile analytics and much-needed transparency.
2022 may have been another bear of year. But that doesn’t mean it wasn’t one of transformation. Let’s take what we’ve learned to 2023 and see how far we can go.
For more information on how Spaulding Ridge can help you find the right supply chain solutions for your organization, contact Kyle Rish at [email protected] or Wade Lyons at [email protected].
