When Was Your Supply Chain’s Last Health Checkup?

As humans, we all know that annual checkups and twice-yearly visits to the dentist can help stave off bigger problems down the road. We also know that routine, proactive checkups on your vehicle, your home’s heating and cooling system, and other major investments can help ward off issues that wouldn’t necessarily surface until there was a complete failure or mechanical breakdown.

What you may not know is that your organization’s supply chain is just as vulnerable to minor or major interruptions, and that regular health checkups can keep it running smoothly and reliably in any business conditions. And much like every New Year pushes people to rethink their current situations and future goals, the transition into the COVID-19 recovery period is a prime time to check in on your supply chain and ensure that its operating well and aligned with your organization’s goals.

“As companies emerge from the storm, it will be more important than ever to test the resilience of their supply chains in the current environment,” Spend Matters states, “and strengthen them in preparation for any future crises.”

What are the Checkpoints?

To be most effective, health checks can’t just be an independent exercise. For best results, you’ll want to pull in an outside perspective of best practices and peer comparison. IntelliTrans, for example, helps serves as that “second set of eyes” and helps organizations create, implement, and monitor long-term, multi-year plans to achieve results.

Some of the top “checkpoints” that should be examined during a supply chain health check include:

• Demand and inventory management
• Load factor improvement
• Fleet-sizing analysis
• Invoice auditing automation
• Multi-modal rate negotiations
• Network design
• Distribution planning
• Mode and carrier selection
• Best-in-class benchmarking
  
  

Supplier Checkups are Critical

If there’s one thing that we all learned from the pandemic, it’s that supply chains are pretty vulnerable to disruption and that they won’t always be able to scale up as quickly as we need them to (think the toilet paper crisis of 2020—you get the picture). This is one of many reasons why a supply chain health checkup should be done on a regular, predictable basis.

Your suppliers are a good starting point. Spend Matters tells companies to assess how the impact of the crisis may have affected suppliers’ working capital requirements, longer term viability, and future plans. Make sure there are mechanisms in place to assess and monitor supplier risk on an ongoing basis, including financial risk; understanding key suppliers’ future plans in areas such as M&A, capital investment and diversification; and supplier-related risks like data security issues, cybersecurity events, compliance breaches, and reputational damage.

The health check should also include an in-depth agility assessment, particularly when it comes to your upstream supply chain (i.e., where your products are coming from). “In the coming months, some countries will be open for business, whereas others will continue to operate under lockdown conditions,” Spend Matters points out. “As a result, companies may need to be more agile when it comes to sourcing goods or services from suppliers in different geographical locations.”

Finally, Dun & Bradstreet tells companies to peel back the layers of their supply chains–including parent companies, subsidiaries, and their ties to other organizations—and really get to know who you’re doing business with. Only then can you be certain that your supply chain is healthy and ready to tackle the challenges that are put in front of it.

“Using analytics and a data-driven strategy, enabled by technology, can reveal savings, untapped opportunities, and unforeseen risks,” Dun & Bradstreet advises. “By vetting suppliers upfront, you can identify things like supply availability, lead times, and financial and operational risks, as well as avoid doing business with violators.”