Companies Adapt to a Supply Chain Where There Is ‘Nowhere to Hide’
More companies are swiping right on new suppliers in the hope that these new relationships will bring greater resiliency to their supply chains.
A survey of more than 1,100 companies found 57% were planning to diversify their supply chains by working with new suppliers. DNV GL, an international accredited registrar and classification society, said its research also found companies hoped to mitigate the impact of the pandemic by embracing digitalization (36%), revising supplier criteria (36%) and reviewing stock management practices (36%).
“With severe effects such as reduced sales and revenues [57%], reduced production [39%] and increased operational costs [35%], it has been extremely challenging for many companies to continue doing business,” said Luca Crisciotti, CEO of business assurance for DNV GL. “It is not surprising that the strategic change most companies have identified is to spread their supply chain risks by diversifying their supplier base, providing them more than one leg to stand on in the future.”
None of this is to suggest that companies are dumping their legacy suppliers willy-nilly for new partners. DNV GL noted that “companies are working actively in a collaborative and constructive way with existing suppliers to find pragmatic solutions.” This includes working together to identify and assess risks, identify and implement mitigating actions, and monitor implemented actions. The goal is to better know suppliers — whether old or new — to understand and plan for their impacts up and down the supply chain.
“There is nowhere to hide,” Crisciotti commented. “Every issue must be tackled head on and quickly. Resilience has become less about maintaining a steady state. It is about being able to assume an agile and dynamic approach. COVID-19 is forcing companies to reimagine resilience, to change and adapt. It is good to see that companies are learning and moving in the right direction.”
Click here to view the complete survey report.