How Coronavirus Could Wreak Havoc on Your Supply Chain
Procurement might be one of the last things on your mind, but it should be one of the first.
Over the past few weeks, COVID-19 has transformed American life in ways many never thought possible. As schools close, stores shutter early and business goes digital, procurement might be one of the last things on your mind — but it should be one of the first.
Every business leader knows she needs a steady supply of key products to continue operating. The spread of COVID-19 promises plenty of unknowns well into the future, but one thing is certain: Your supply chain is at risk of major disruption. The coronavirus has already impacted the supply chains of 75 percent of American businesses. While that number is bound to go up, so is the severity of those disruptions. Here are a few ways COVID-19 might further impact your procurement and what you can do to prevent it.
1. Prices become unmanageable
We’ve already seen it all over the news: Hand sanitizer and toilet paper are going out of stock in stores and selling online for exorbitant prices. Paying a premium for household products can be a major inconvenience, but sharp upticks in the prices of your business’s key products could spell disaster. Small businesses are at particularly high risk of this. If your company’s purchasing power isn’t high enough, your suppliers might feel comfortable jacking up prices to unaffordable levels in the face of supply problems.
One potential way around this is by sourcing from local vendors as much as possible. The closer your suppliers are, the easier it will be to guarantee continued delivery of the products you need. This also makes it easier to hold suppliers accountable for any discrepancies in pricing or distribution that might occur.
Another option is to join a group-purchasing organization. Group purchasing organizations (GPOs) leverage the combined buying power of their members, ensuring no small businesses get lost in the chaos of COVID-19. GPOs often employ cutting-edge logistic technologies, meaning the fastest and most efficient supply options are always known and available to members.
2. Communication problems arise
The world of procurement hasn’t just been disrupted from the supply side. The 2020 American Procurement Congress has been postponed until September. COVID-19 already has international travel at a standstill; domestic travel might not be far behind. Meetings, check-ins and networking opportunities are crucial components of the procurement process, but digital alternatives aren’t always as intuitive as they should be.
Every business in 2020 should have a handle on at least one video-streaming platform, be it Zoom, Skype or Google Hangout. For many people, video meetups don’t quite have the same feel as in-person meetings, so it’s important to use these technologies regularly to achieve some sense of familiarity.
For networking, you might consider this an opportunity to finally get a full grasp on what platforms like LinkedIn have to offer. Connect with other businesses of your size in your sector to see how they’re dealing with procurement issues. Reach out to other suppliers who might be able to get what you need at more competitive prices. While conferences and other meetings may face disruption, your ability to connect doesn’t have to.
3. Key personnel get affected
Unfortunately, physical interaction is sometimes a key component of procuring your company’s stock, but companies should start adopting as many elements of the digital supply chain as possible. Businesses are increasingly instituting remote work policies, and your procurement processes should be no different. By digitizing the process, you can protect your company against relevant personnel being isolated, quarantined or hospitalized as a result of the virus. The more you can move online now, the less damage control you’ll be forced to do in the future.
There's a world of unknowns surrounding COVID-19, but that doesn’t mean your business needs to stick its head in the sand. By using digital technologies and safe personnel practices to lock down key components of your procurement strategy now, you can protect yourself against the more serious disruptions that might be coming your way.
Entrepreneur Editors' Picks
These Co-Founders Are Using 'Quiet Confidence' to Flip the Script on Cutthroat Startup Culture and Make Their Mark on a $46 Billion Industry
My 7-Year-Old Daughter Started Selling Eggs. Here's What She Taught Me About Running a Startup.
Why You Need to Become an Inclusive Leader (and How to Do It)
Career Transitions You Can Make in Your 40s and 50s
Billionaire Naveen Jain Is an Expert at Disrupting Fields He Has No Experience In. His Secret Sauce for Building Multi-Million Dollar Companies? 'You Have to Come as Naive.'
4 Principles to Develop Next-Level Leadership at Your Company
This Filipino American Founder Is Disrupting the Beverage Aisle by Introducing New Flavors to the Crowded Bubbly Water Market