Source-To-Pay 2020: The New Normal

What can be done by procurement and supply chain management professionals NOW and SOON to stay ahead of this challenge?


With COVID-19 still spreading across the globe, it’s clear the economic costs will have a huge impact on organisations.  It was reported back in February that 94 percent of Fortune 1000 companies were already seeing supply chain disruptions due to coronavirus. (1) We can’t help but notice the vulnerabilities of a global supply chain, with procurement on the “organisational front line,” so to speak. Adapting to disruption and trying to predict risks through such actions has become the new normal.  

Although at first, organisations went into an intense reactive mode, we now see some shifting from reacting to the crisis to recovering and re-purposing their businesses. Adapting to disruption and trying to predict risk has become the new normal. But, we should not lose sight of our overall source-to-pay strategy to include what’s next, and how to ensure we can be resilient on an ongoing basis.  It’s not enough to simply react to these unpredictable situations, we need to be ready for the next inevitable disruption.  In other words, we need to incorporate “the NOW,” “the SOON” and “the ONGOING” into our source-to-pay strategy. 

In this blog, we focus on what can be done by procurement and supply chain management professionals NOW and SOON to stay ahead of this challenge

Strategy for the NOW: Strategic Payables

For many countries at the time of this writing, the worst is yet to come. In many industries, organisations are experiencing revenue reduction at much faster rates than the costs to run their business.  For those organizations and their suppliers, reducing operating expense, optimizing and protecting cash flow and right-sizing bought-in cost-to-revenue, is critical NOW to withstand weeks or months of economic downturn and supply chain disruption.  

There are a number of ways organizations can use “strategic payables” to increase cash flow quickly.  Outsource category management of non-core suppliers and commodities: Experienced Category Leads can identify opportunities to take cost out of third-party bought-in content either as a one-time service or through continuous category management services. Outsourcing partner-run operations for such scope can effectively become a “middle office,” leaving Category Leads more time to focus on revising and implementing category strategies.

Digital middle office: Provide an integrated service desk as a single point of entry for intake and requests to automate user and supplier interaction.  This will drive simplification, efficiency and compliance through transactional processes and can significantly reduce operating expense associated with manual processes.

Advanced insights: By reviewing historical spend, as well as industry pricing trends and other market intelligence through AI-based solutions, organizations can identify spend savings on both indirect spend and direct spend.  Inventory optimization insights can further reduce carrying costs.

Trade payables financing: By outsourcing spend end-to-end with a service provider who works with preferred commercial integrators and supply chain financing partners, they can provide supply chain financing for earlier and debt financing for extended payment terms. This will allow organizations to optimize annual cash in as few as one to three months.

Strategy for the SOON: Optimize OPEX

Most industries are looking to further optimise their operating expenses (OPEX) soon as central in their recovery plans.  A primary way to do this is to convert capital expenses (Capex) to OPEX, such as to engage a service provider, in order to increase deductions and reduce taxes for the near-term, as well as to reduce maintenance cost longer term.  Other ways to affect OPEX are to optimize where work gets done; reduce risk and improve compliance; and improve the efficiency and effectiveness of how work is done, such as through automation.

The objective for the NOW and SOON phases is to gain upfront savings to fund transformation activities and ensure resiliency in the ONGOING phase.

Strategy for ONGOING OPERATIONS: Transform to deliver value and plan for resiliency

Although the near-term concerns are increasing cash flow and optimising operating expenses to “get over the hump” during the crisis, organisations should continue to prioritise transformation programs that deliver sustainable value over time.  It is still crucial to re-engineer workflows to use cognitive capabilities for insights and connected experiences for longer-term advantage – we call these “intelligent workflows.”  It is also crucial to curate high quality, proprietary data proactively for insights to deliver value ongoing.

Lastly, we can expect resiliency of workforces, workplaces and IT systems to get renewed attention in ensuring continuity for ongoing operations.  As stated in the IBM Institute for Business Value COVID-19 Action Guide, “perhaps the most resilient course of all may be teaming up with supply chain partners to establish a coordinated crisis-support system.  In these sorts of situations, partners will likely rise or fall together, and sharing information and ideas in that climate becomes highly valuable.” (2)

For more information on Cognitive Procurement and Intelligent Workflows, read “Cognitive Procurement: Seizing the AI Opportunity” or visit ibm.com/process/procurement.

(1) Fortune Magazine, “94% of the Fortune 1000 are seeing coronavirus supply chain disruptions: Report,”  Feb 21, 2020 https://fortune.com/2020/02/21/fortune-1000-coronavirus-china-supply-chain-impact/
(2)  IBM Institute for Business Value COVID-19 Action Guide, Mar 2020, https://www.ibm.com/thought-leadership/institute-business-value/report/covid-19-action-guide

How To Set Your Supply Chain Up For Coronavirus Recovery

How should you set your supply chain up for coronavirus recovery? Find out the steps here.


With the majority of the world still in lockdown, no detailed blueprint for economic recovery, and no vaccine in sight, the end to the coronavirus pandemic still seems a while off. But reassuringly, there’s signs that we may now at least be in the recovery phase, with many European countries contemplating easing restrictions, and the US announcing they may do so in May. With these reassuring steps, supply chain managers the world over, many who felt blindsided by the speed and force of coronavirus disruptions, are keen not to make the same mistakes again. So they’re now asking themselves the critical question we all need to know the answer to: How do we set our supply chains up for coronavirus recovery? And when we do enter the recovery phase, how do we ensure it’s successful and ideally, fast? 

Step 1: Ensure your cash strategy is fit for purpose 

Early on in the crisis, many optimistic leaders predicted that our economies would simply bounce back in what they called a ‘V’ shaped recovery. But as the pandemic has unfolded, it’s become clear that this is most likely not going to be the case. Economists now predict that we’ll have more of a ‘U’ shaped recovery, where business and consumer spending slowly return over time, although activity is still expected to be significantly subdued until a vaccine is found. 

This leaves most companies, and as a result, most all of us in a tight spot. The uncertainty of it all means that you may need to adjust your cash strategy to ensure it’s fit for purpose. 

Adjusting your cash strategy may take many forms. One strategy is to try to ensure you have more cash available by adjusting your accounts receivables strategy, for example, trying to get invoices out and paid more quickly, and removing barriers to debt collection. 

Another method is to adjust your accounts payable strategy, although if you do so, ensure you do it strategically. Take this opportunity to analyse your suppliers. Who provides the most strategic value? Can you strike a more favourable deal? If you can, ensure you negotiate, for example, perhaps you will give more business to a certain supplier in exchange for favourable payment terms? Analyse everything and strike the delicate balance between looking after suppliers and maintaining your business’s cash reserves. 

Step 2: Identify and assist at-risk suppliers 

Conserving cash is the first critical step in coronavirus recovery, and the key one when it comes to pure business survival. But recovery, when it comes, will be about much more than that. 

By now, most of us have realised how resilient – or not – our supply chains really are. Hopefully, we’ve all had time to look deeper into our supply chains, and map the manufacturing capabilities of each of our suppliers, looking into exactly what part is made in what location. Beyond that, hopefully we now understand – if we didn’t before – the exact dependencies of our products and what needs to happen when, and from where, in order to give our customers what they need. If you haven’t yet undertaken this analysis, now is the time to do so. 

Assuming you have, though, you may have encountered suppliers who are now struggling, or who will be struggling in the near future. Even if your suppliers may not have told you as much, signs that a struggle is indeed present include incomplete or delayed deliveries, changes in debt covenants, or sudden changes in your key contacts. 

As any supply change manager would know, protecting your suppliers is key, and now, more than ever, you may need to do what you can to help. If you’ve identified a supplier who is struggling, try to help by committing to orders or even exploring credit options, such as lending against future orders or applying your company’s credit to loans. In extreme cases, you may even need to look at an equity investment scenario if that supplier is critical to your production. 

Step 3: Look after your people

Cash and suppliers may be fundamental to our day jobs. But what would those look like without … us? 

As any seasoned leader understands, your people are critical to just about anything you want to achieve, and especially a ramp up after a prolonged period of stress and uncertainty. And while, with the current job market, you’re not likely to lose staff if you don’t make an effort right now, when recovery is in full swing, the difference in productivity between disengaged and engaged and motivated staff (which can be up to 22%), can be monumental. 

But what’s the best way to look after your staff right now? Experts recommend: 

  • Be realistic, kind and flexible: With the current crisis affecting the lives and livelihoods of most of the world, now is an extremely stressful time for all of us. Be clear about what you need from your staff, but also be kind and realistic about what you expect them to achieve, and be flexible about when you need it. 
  • Offer mental health support: Right now, the WHO (World Health Organisation) estimates that one in four people are experiencing new or heightened mental health issues due to the crisis. If you can, offer your staff counselling support or direct them to government resources so they can seek help, if needed. 
  • Give upskilling options: While having a high workload right now can be stressful, so too can not having enough to do. If your team isn’t that busy, do your best to reassure them that their jobs are safe (if possible). Beyond that, endeavour to offer upskilling options. These options don’t need to cost a lot or even take long – here are ten critical skills your procurement or supply chain team can learn, for free, for a $0 budget. 

Step 4: Look after your customers

How you treat your staff during a crisis will determine whether or not you’re able to retain them in the recovery period and beyond. Likewise, how you treat your customers is just as important. 

With significant disruptions to supply chains, freight and logistics worldwide, there’s a high chance that at some point, you may disappoint your customers. There’s two key ways you need to manage this: through communication, and through prioritisation. 

For the first, communication, you need to do your best to determine, far ahead of time and with your own suppliers, what delays might exist or what changes in orders you foresee. Once you know, let your own customers know and keep them regularly updated on progress. As always, it’s better to give a worst-case scenario and then delight them when orders do come through faster than expected. 

For the second, prioritisation, if you’re facing considerable shortages and you can’t find an alternate supplier, you may need to prioritise your most valuable customers. Look at factors such as profit margins and key customer segments when figuring out who to prioritise, or alternatively, look at allocations to certain customers if required.  

Get prepared – now 

Recovery might seem a while off, but it’s closer than you think. Make sure you take these steps, now, to ensure you’re in the best place. 

Is there anything else you’re doing to plan for recovery? Tell us in the comments below.  

Want to keep up with the latest coronavirus and supply chain news? Join our exclusive Supply Chain Crisis: Covid-19 group. We’ve gathered together the world’s foremost experts on all things supply chain, risk, business and people, and we’ll be presenting their insights and daily industry-relevant news in a content series via the group. You’ll also have the support of thousands of your procurement peers, world-wide. We’re stronger together. Join us now.

How To Make Your CEO Fall In Love With Your Tech

What are the best ways to ensure you have your CEO’s backing for a tech implementation project?


You’ve come up with your specification and your supplier selection is complete. Your chosen tech solution has beautiful features and the potential to fulfil your wildest efficiency dreams. But you’re worried that the attraction won’t spread through your organisation starting at the very top.

How can you make your new tech solution an irresistible proposition for your CEO? Here are my tips for making sure it is impossible to resist.

1. Reduce the risk

I’ve met many CEOs in my career. I am sure that yours is no different from the rest. Their priority is to deliver strategic business goals and improve the bottom line. So it’s highly unlikely that a tech implementation over in procurement is front of mind.

Your CEO reads the news and see stories about IT project cost and time overruns. And their brief is to protect company reputation at all cost. While procurement may not always be top of their agenda, it’s important that your tech is a success story rather than something that keeps your CEO up at night.

And what I’ve found in all the tech implementations that I’ve been involved in is that managing risk should always be prioritised.

Set deadlines and milestones at the outset that you know your team can achieve to reduce the risk of project time overruns. Work with your provider and implementation partner at the start of the project to identify financial resources that will be required and any contingency funding that you need to put in place. You could even carry out a full dry run process (that we call blueprints) where we work to anticipate and eliminate risks and surprises.

These blueprints also bring alignment between your solution provider and implementation partner at the start of the project. This means all parties agree on:

  • resourcing
  • timeline
  • costs

Incorporate a contingency into your implementation plan. This means you won’t have to go back to your CEO and ask for more money if, for some reason, your blueprint changes or something doesn’t go as planned.

By actively managing risk you can set your project up for success and secure its position in your CEO’s heart.

2. Keep your promises

Your CEO wants any project that is approved to be delivered without deviation from the agreed scope. And the good news for you is that the evidence shows tech implementation projects now regularly achieve the objectives that they’ve been set.

One of our Fortune 200 clients’ CEO recently challenged our project team with an ambitious project objective: “I want you to implement a solution that everyone uses and everyone loves.”

We managed expectations by making sure that the blueprint was focused on the objectives of the project. This provided the guard rails to keep the team focused and not let them veer off the agreed project course.It’s important to remember: if the most perfect workflow or tech solution design does not meet the objective you set out to achieve, then you’ve broken any promises that you’ve made.

You can stay in scope by choosing an experienced implementation partner, who can help to keep things on track. Make sure their values align with yours and they have experience helping others move to where you want to go. Don’t forget your implementation partner becomes an extension of your team, and if their values are not aligned with yours, it will directly impact success.

When selecting an implementation partner think about their staffing approach:

  • how do they compensate their people
  • what’s their company culture and morale
  • will you have access to executives if you need to escalate

Doing the thinking upfront with your project team about scope, implementation partners and key deliverables can help ensure your project objectives are achieved.

3. Make it an attractive proposition – and deliver

To make your tech solution attractive to your CEO you’ll need a compelling business case. And what an attraction the promise of savings and efficiencies is – particularly when this justifies the investment involved. However, as with promises made in any relationship, you need to do what you say you’ll do.

You need to carry out robust work upfront to fully quantify what can be achieved.  Involve Finance in the process and get them to sign off on savings you’ve identified: getting their buy-in will help when the time comes to demonstrate these benefits are realised.

Once implementation starts, make sure you’ve got robust monitoring processes in place. You might also want to track benefits delivered on the way. There’s no better way to retain the CEO’s backing than being able to produce evidence that your promises aren’t being broken.

4. Focus on good times, not bad

As with any tech implementation, there are likely to be challenges along the way. And you don’t want talk of bad times to reach the ears of your CEO.

Perhaps one of your teams needs to work in a new way. Maybe the functionality isn’t quite what you recalled from the demo. It’s important that you actively manage these opportunities for improvement and change rather than leaving them as opportunities for negative comment and discontent.

On a global implementation for a US-based Fortune 500 client, we ran into some very heavy resistance from the Project Champion and his direct reports. Every idea, potential solution and decision was met with a litany of questions and the suggestion that our solution just couldn’t be rolled out.

Not only was the timeline in jeopardy but the team was dysfunctional and riddled with a lack of trust and response. Fortunately for the team, that negativity didn’t filter up to the CEO, or the project would have been doomed to failure right from the start.

By focusing on local solutions, we managed to change the direction of that project. We focused on meetings and briefings that were face-to-face. Getting in front of detractors and people with concerns was one of the most effective ways to reduce resistance and concerns. Within a couple of months, a positive attitude towards the project was achieved and progress was back on track.

And as making any implementation is all about people, how about adding a bit of pizazz to your implementation by using a collaboration app? It maps and tracks where your stakeholders are at. With graphs and charts at your fingertips, there’s no better way to bring the project to life and demonstrate the buy-in from your people when you present it to the CEO and the Board.

Using a continuous improvement approach, you can make sure that any challenges are addressed. This way, the only noise your CEO hears is the sweet sound of success.

If your tech implementation is effectively delivered, it won’t be difficult for your CEO to fall in love. Great timing, promises kept, an attractive business case and a focus on good times – not bad – will make your tech solution just impossible to resist.

Did you know that Matt has just teamed up with Procurious to launch ‘Major Tech Fails’ – a series looking at everything from implementations to getting buy-in. Register here

Grocers Battle In COVID-19 Last Mile Delivery: Supply Chain News

As you sit home in your COVID-free sanitised domestic bubble, there’s a war raging outside your door.


As social distancing and lockdown measures are implemented around the world, a growing number of food and grocery players have been forced to ramp up their capability to handle last mile delivery. And it’s no mean feat.

Supply chains are adept at shifting a tonne of cornflakes to a remote supermarket in Northern Wales or Nashville, but a single ready-to-eat takeaway to someone’s door is an entirely different scenario – it’s a service that’s expensive and time-consuming to offer.

But that doesn’t mean it’s not important. Right now, amid COVID-19 lockdown scenarios around the world, that’s exactly what everyday consumers need from their friendly corner grocery or takeaway retailer.

A report by CB Insights reveals that retail will be more personal, more immersive and more automated as we roll into 2020. Retailers and brands will have to understand shoppers better, and will continue to turn to new retail tech options. Profitability and technology will remain a top focus. 

The other battlefront for the grocery sector is keeping stock levels in check, as consumers stockpile household groceries around the world. Basic food items such as canned items, flour and pasta have been flying off the shelves far faster than they can be restocked.

While disruptions have so far been minimal and food supply has been adequate, there are predictions made in the media that this scenario could change as food supply chains are disrupted by COVID-19.

For example, if big importers lose confidence in the reliable flow of basic food commodities, panic buying could ensue, driving prices up.

Delivery startups bloom

Of course, there are already established last-mile delivery providers in this space. On-demand startups have mushroomed into the space around the world, transforming the way consumers order and enjoy takeaway food.

They’re all being handed the ultimate test as a huge surge in demand amid tougher operating conditions amid the shutdown of workplaces takes hold.

Uber Eats and Deliveroo are dominant players in this space, and have been run off their feet amid the pandemic in markets around the world. Deliveroo was crowned the UK’s fastest-growing technology firm by Deloitte last year, boasting an incredible rate of 107,117% over four years.

And while it’s hard to pinpoint just how much growth they’ve had in recent months, higher demand has led to higher pricing in some areas, while some companies are recruiting new drivers for their delivery staff.

Meanwhile, Amazon is run off its feet fulfilling one-hour delivery windows via Alexa.

To keep up with demand, the company is bolstering its capability, adding 100,000 jobs to meet customer demand and fulfil orders for essential products. It is also increasing capacity for grocery delivery from Amazon Fresh and Whole Foods Market.

The challenge has been maintaining high levels of hygiene in the home delivery service, with many providers rushing to email customers and assure them that standards have increased.

Bicycles in London

Of course, home delivery of groceries is not new. Nearly 30 years ago, when just 15 per cent of Americans had a computer, Thomas Parkinson set up a rack of modems and started accepting orders for the internet’s first grocery-delivery company, Peapod, which he founded with his brother Andrew.

In an unprecedented move, Sainsbury’s in the UK is expanding its capacity to support its efforts to feed the nation and meet growing demand for home grocery deliveries. This comes in the form of bicycle deliveries in central London.

This has been an invaluable service offering for the elderly and customers with immune issues who were self-isolating in their homes.

Sainsbury’s is also trialling its fast delivery service Chop Chop to deliver groceries to customers from closed convenience stores, offering shoppers another way to access essential grocery and household items.

The supermarket, which was forced to temporarily close to a number of its local convenience stores across the UK due to a drastic drop in customers, is planning to use some of these locations as logistics hubs to deliver goods to the most vulnerable.

Sainsbury’s chief digital offer Clodagh Moriarty says demand has reached unprecedented levels and they’re doing all they can to find new ways to serve more customers. “While we started the trial in London, we hope to be able to bring this fast delivery service to other cities in the UK very soon,” he says.

Customers who might be self-isolating or unable to get to a local store will be able to order a top-up shop of up to 20 grocery products through the Chop Chop app and have them delivered to their doorstep in as little as an hour.

A further 400 essential grocery and household products are available on the service, offering customers another way to access the essential items that are most important to them quickly and conveniently.

Demand Down Under

In Australia, both major supermarket brands Coles and Woolworths were forced to halt  online deliveries to catch up with demand in recent weeks.

However, Coles has announced a move to advanced robotics in recent weeks to help double the number of home deliveries it can make. The supermarket giant has entered into an exclusive partnership with British supermarket and solution provider, Ocado, to deploy its end-to-end online grocery solution.

Ocado includes an online grocery website, fulfilment technology and last-mile routing management technology.

One thing is for sure. Once things return to normal, customers will continue to expect the convenience of home delivery from food and grocery players now offering this service.

Just how key players manage this demand is yet to be seen.

Want to keep up with the latest coronavirus and supply chain news? Join our exclusive Supply Chain Crisis: Covid-19 group. We’ve gathered together the world’s foremost experts on all things supply chain, risk, business and people, and we’ll be presenting their insights and daily industry-relevant news in a content series via the group. You’ll also have the support of thousands of your procurement peers, world-wide. We’re stronger together. Join us now.

DOS And DON’Ts For Supply Chain Pros Right Now

DOs and DON’Ts specifically for supply chain professionals that you should consider during coronavirus


There has never been a moment in time since the second world war, that there has been so much global awareness and need for resilient and dynamic supply chains, and the qualified professionals to manage them; in a single strategic battle toward a common enemy. The COVID-19 outbreak was initially concerning to firms with established supply chains embedded throughout China, but it’s clear now, that it’s effects are going to be far more reaching on a global scale, and felt throughout the months and year(s) ahead.

In my job, I have the privilege of constantly speaking with dedicated supply chain professionals globally. From the woman director controlling over a half a billion dollars worth of global spend in the fast-moving consumer goods industry in the ‘big city,” to the little guy ordering replenishment stock for a small chain of regional tire repair shops in Piqua, Ohio. Lately, they’ve been asking the same question: “What are we going to do?”

So whether you are quarantined and idle at home, or your employer is an essential service and you’re confined to toiling behind a desk at work, here are some DOs and DON’Ts specifically for supply chain professionals that you should consider – NOW.

DOs

Identify how your firm’s production capability and equipment can be retooled to produce hand sanitizers, gloves, gowns, face masks or shields, medical supplies or other vital equipment. There is still a need, and will be for quite some time.  Who knows, by doing so, you’ll not only be helping front line workers and healthcare providers, you could also get your firm re-classified as an essential service, kick starting idle production lines, and help your fellow employees get called back to work and earning a steady income again.

Identify where in the supply chain your firm may have spare capacity, to assist in National/Regional relief efforts. It’s not only physical commodities that are in need, it could also be transportation, distribution, or even warehousing related space or activities to move vital supplies and equipment around.

Review your entire supply chain – top to bottom, to evaluate where problems are arising and you’re vulnerable, opportunities which may be presenting themselves, and develop a status report and comprehensive supply chain action plan for management. 

Revisit your disaster contingency plan and develop a new one, specifically including virus and pandemic related situations. (This wasn’t our first, and certainly won’t be the last pandemic.)

Review your firm’s supply chain exposure and resiliency to recover from natural disasters and pandemics, and the preventative measures that you can design and implement now, to cope with swings in stock availability, transportation, and security issues and evaluate potential recovery times. 

Review all your existing contracts for force majeure (unforeseeable circumstances) clauses; and determine which of your suppliers may be in a position to try to enforce them – leaving you vulnerable to disruption and stock outs. Develop solutions.

Check to see if your firm has insurance protection covering any losses, should your supplier(s) not be able to fulfil their contractual obligations.

Reassess your current supply chains in China, India, and other global hot spots. Consider other possible regional opportunities for the future (such as Vietnam, Bangladesh, etc.), as contingencies, as these countries have been working to improve working and business environments recently.

Increase your level of communications and collaboration with overseas suppliers to understand not only their challenges, but monitor ongoing labour, discriminatory wage practices and health and safety regulations as well. These have led to manufacturing, transportation, and other related strikes and protests. Keep in mind that political protests that disrupted business recently were not limited to strictly Hong Kong and China, but also happened in Latin America, Middle East, Brazil, India and Mexico as well. 

(Yes, do a deeper dive and move toward becoming a ‘Geopolitical Specialist’ when analyzing regional risk in your global supply chain.)

Ask all vendors about their plans on dealing with demands and changing capacity, and how swings may impact their stock availability, quality, increased production and delivery times, and their labor force.

Sharpen the saw.  Take the time to invest in yourself and consider taking online courses in the Supply Chain field, offered by your favourite professional association.  They can help with strategies and possible solutions to supply disruptions during challenging times. Perhaps use the time to finally finish your study toward the Supply Chain Management Professional (SCMP) accreditation?  

Catch up on your supply chain reading with issues of your favourite trade magazine.   Why reinvent the wheel, when you can learn practical information from the titans of industry themselves; who are guiding their firms and making a difference in the supply chain community. 

DON’Ts

Don’t wait to step up or be asked for your supply chain expertise, your firm’s production abilities and it’s logistical capacity and how they can be used to keep critical supplies and support services open to front line workers and healthcare providers struggling in your communities.

Don’t take a ‘wait and see’ attitude and hope that another major disruption to your supply chain doesn’t occur again in the future… it will. Learn from today, plan and prepare for tomorrow.

Don’t lessen your due diligence when sourcing urgently needed supplies -via new or potentially alternative sources of supply away from China, Asia, or other parts of the globe experiencing problems.  Beware that counterfeit markets thrive in times of crisis; and quality and social responsibility risks should also be considered in addition to simply cost and immediate availability. Now is the time to increase efforts to protect your firm and supply chain; not lessen or weaken it with quick or cheaper sounding alternatives.

Don’t forget the potential to accidentally involve your firm in forced and/or child labor, poor working conditions, other human rights abuses or environmental concerns; when pre-qualifying any new and potential vendors. Practice responsible and ethical sourcing.

Don’t immediately threaten legal action against suppliers (local or distant) caught in a bad situation and who attempt to enforce the force majeure clauses within their contracts. Work with them to determine a reasonable course of action instead.  Right now cooler heads should prevail and honest transparency about their situation and capabilities, shared with you – as partners and lenders, is of paramount importance, if you’re going to get through the storm.

Don’t participate in the hoarding, resale, or profiteering from food, cleaning and medical goods, protective equipment and other essential items which could be redirected and used in the production of medical supplies for front line workers in your community.  Whether personally or on behalf of your employer – it’s just not right.

Don’t wait for authorities to enact and enforce new sweeping regulations controlling the supply chain.  Lend your knowledge and expertise and see how you and your firm might participate in regional supply chain coordination units, to ensure the public’s safety and the continuance of a strong and resilient supply chain of much needed food and medical goods and services. 

This article was originally published on LinkedIn on 29 March 2020 by Tim Moore , Canadian Supply Chain Recruiter. It has been republished here with permission.

Want to keep up with the latest coronavirus and supply chain news? Join our exclusive Supply Chain Crisis: Covid-19 group. We’ve gathered together the world’s foremost experts on all things supply chain, risk, business and people, and we’ll be presenting their insights and daily industry-relevant news in a content series via the group. You’ll also have the support of thousands of your procurement peers, world-wide. We’re stronger together. Join us now.

How 4.0 Tech Is Cracking The COVID-19 Code: Procurement News

How to use Industry 4.0 technologies to weather the Covid-19 crisis


Industry 4.0 technologies have come into their own in helping combat COVID-19.

China confronted the virus with a futuristic mix of artificial intelligence, machine learning, and robots.

Now that the epicentre has moved to the western world, leaders look to China for clues to stop the spread.

Here’s a look at how China’s use of 4.0 tech is now influencing the way America and Europe identify, treat and track the virus.

Predict

A voice of warning

Speed and accuracy of information are everything in a crisis.

The first global warning of the virus didn’t come from the World Health Organization (WHO) or the US government.

No, it came from artificial intelligence. A Canadian company named BlueDot used an algorithm to identify the possible outbreak days before WHO made its announcement.

BlueDot uses AI to analyse news reports and internet data to detect the spread of infectious diseases. The algorithm predicts where diseases will spread, based on millions of flight itineraries.  With this information proving invaluable, BlueDot is now working with countries in North America and Southeast Asia to predict virus hotspots.

Diagnose

Faster testing

There are widespread complaints of testing shortages.

On top of that, there are concerns about the long process of taking a sample, analysing it in a lab and reporting the result.

Luckily, necessity remains the mother of invention. Several companies are racing to invent easier, faster ways to test.

Researchers at UK universities are trialling a smartphone app that can give results in just 30 minutes. The app is linked to a small device that analyses a nasal or throat swab. No lab necessary.

And an invention from an American-based company can give positive results in five minutes using a device the size of a toaster.

Managing supplies

It’s no surprise that supply chains are still recovering from the shock of the pandemic.

Hospitals are experiencing a testing swab shortage, owing to supply chain disruptions from suppliers in Italy and China.

Several hospitals are making their own test swabs with the help of 3D printers. One medical provider in New York, called Northwell, is printing 3,000 swabs a day. Side-by-side test results show the 3D-printed swabs are just as reliable as the traditional swabs.

There’s also a swell of companies using 3D printing to make facemasks and other personal protective equipment (PPE).

Fever pitch

Authorities in China found a safer way to take temperature: augmented reality (AR) glasses.

Someone wearing the glasses can identify a person with a fever from 10 feet away.

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The World Is Running Out Of PPE. What Can We Do?

Could we have prevented the shortage through better supply chain management?


If we’ve learnt anything from the past few months, it’s that one supply chain matters more than almost all others, and that’s medical supply and Personal Protective Equipment (PPE) one. Yet, it also seems to be the one that isn’t functioning half as well as it needs to be, with devastating stories emerging worldwide of doctors and nurses forced to wear bandanas for masks and rubbish bags for gowns. Many on the front line are also gravely concerned for their own welfare, and devastatingly, over 100 doctors and nurses have now died fighting the virus.

As procurement professionals, we look at these statistics, shake our heads and immediately ask ‘what could we have done better?’ But realistically, could we have prevented this? Is there anything we can do right now to change it? And what important lessons do we need to learn now that we can apply to our supply chains, forever more? 

Could we have prevented the shortage through better supply chain management? 

On the issue of preparedness, many in hospital procurement roles are facing the tough questions right now. Saskia Popescu, a US epidemiologist, recently told Vox that the issues we’re currently experiencing is something we all should have foreseen: 

‘Whenever we have done exercises for pandemic preparedness, supply chain issues were a well-documented challenge. It’s surprising that we let it get this bad.’ 

While some countries are taking drastic action to ‘catch up’ from a supply chain perspective, including in the US where Donald Trump has invoked the Defense Production Act to order companies to produce everything from ventilators to masks and hand sanitizer, many argue that it’s too little, too late – and that reactionary measures never quite work when it comes to supply chain management. 

Supply chain shortages now have life and death consequences 

Shortages of PPE equipment causes significant issues for our health systems. Hospitals around the world right now are approaching, at or over peak capacity, meaning that any nurse or doctor who gets infected is one less to treat patients who are already sick. Sick doctors and nurses have a domino effect and may threaten the ‘flattening of the curve’, which is something we all know we need to do in order for our health system to cope.

In a nutshell, sick doctors and nurses create even more fear within the health system community, and may lead others to refuse to come to work. This, in turn, creates a shortage of health staff when they are needed most. Val Griffeth, an emergency doctor who is leading the new movement #GetUsPPE, sums it up perfectly: 

‘If you have health care workers who don’t feel safe, you may very well have people who don’t come to work.’ 

‘Worse, you have people who come to work, get infected, and end up in the hospital taking up a bed and also not seeing patients that day, that week, or that month.’ 

But how did we get here? 

Many procurement professionals looking at the current issue with PPE point to the drastically increased demand we’re now experiencing as the key issue that broke the camel’s back, so to speak. But when you dig under the surface, that’s not the whole story. 

As with the virus itself, the issue began with China. As the world’s primary producer of face masks (China produces more than half of the world’s total supply), the Chinese themselves originally needed what they produced, so instead of exporting, they began to produce masks, and then hoard them. Around the world, the hoarding continued, with some countries, such as Germany, swiftly banning PPE exports. The problem, then, became one of supply and demand – as demand rose world-wide, there were already supply issues with the world’s major suppliers as they had effectively used what they would otherwise export. 

When the epidemic turned quickly into a pandemic, the demand side of the supply chain also suffered a major hit as the public soon began buying masks en-masse. Despite the fact that medical authorities have repeatedly suggested that masks aren’t needed for healthy people, they continue to be purchased in almost every country, meaning that demand is at an almost all-time high. In a situation like this, is it almost inevitable that a supply chain would fail? 

What should we do about it?

With the real life-or-death situation we as procurement professionals find ourselves in, the question now is not what we should have done but we can do.  According to Matt Stewart from RiseNow, the situation we find ourselves in isn’t inevitable. Matt believes that technology can be our ‘secret weapon’ to create the kind of supply chain agility we need to respond to events such as the coronavirus:

‘Technology integration inside your organization (and that of your trading partners), along with the ability to onboard new datasets and suppliers, can actually help you respond almost instantaneously to non-forecastable events, such as the current pandemic.’

Although this type of integration certainly sounds like supply chain nirvana, Matt also believes that a number of factors need to be in place to achieve the level of supply chain agility you’d need to respond to something as serious and sudden as we’re currently experiencing: 

‘Effective supply chain agility begins with developing one or more plans of action based on simulations to any potential supply chain threats, then determining their impact.’

‘To do this, you need an extremely high level of data integration. You also need an early warning detection program, and then, once a threat is identified, you need to retrieve a predetermined action plan, and modify it if need be.’

Also key to supply chain agility, Matt says, is the ability to increase sourcing and detect consumption-side threats: 

‘You need the ability to speed up sourcing, and quickly, which can be achieved through your technology system – but critically, your “data source of truth” must be clean, conditioned, harmonized and accessible.’ 

‘You also need to understand consumption threats, so you’ll need to understand acceptable substitutes, distribution capacities, and the ability to retask existing assets (as we’re seeing with the US at the moment).’ 

Finally, Matt says that logistics flexibility is the final key area you need if you want to respond in almost real-time to large, unexpected supply chain interruptions: 

‘Flexibility within the logistics environment is required as decisions may need to be made to change product offerings and warehouse assets and systems will need to respond to new locations to ensure that productivity stays as high as possible.’ 

Onward and upward? 

Although manufacturers worldwide are working harder than ever to resolve the current shortage of PPE equipment, it’s already proven to be a disastrous, life-or-death problem. But while we can’t change what has happened in the past, supply chain professionals have every opportunity to learn from this pandemic, and to do whatever we can to ensure we protect our supply chains – and the lives of our fellow countrymen – now and into the future. 

Want to keep up with the latest coronavirus and supply chain news? Join our exclusive Supply Chain Crisis: Covid-19 group. We’ve gathered together the world’s foremost experts on all things supply chain, risk, business and people, and we’ll be presenting their insights and daily industry-relevant news in a content series via the group. You’ll also have the support of thousands of your procurement peers, world-wide. We’re stronger together. Join us now.

Will Mexico Overtake China As The World’s Biggest Manufacturer?

Will Mexico soon overtake China as the world’s largest manufacturer of goods? Find out here.

With supply chains the world over now disrupted and many of us now scrambling to find a plan b, c and beyond in order to produce or procure goods, there hasn’t been much room for asking ourselves the big questions. But with life in China now quickly returning to normal, and some European countries already planning to lift restrictions, it’s time we did. If our supply chains can be broken so easily, so quickly, should we continue to trust China with almost all of our manufacturing? But if we move, where should we move? 

Many experts believe that China’s dominance is so well-established that moving elsewhere is simply infeasible. Yet others disagree, and Mexico is quickly becoming a favoured location for plan b – or potentially plan a – manufacturing for a number of reasons. Forbes even went as far as to say that Covid-19 will end up being the final curtain on China’s nearly 30 year role as the world’s leading manufacturer.

Given the monopoly China has had on our manufacturing to date, it’s sometimes hard to imagine an alternative. But many experts believe we have to, and now is the time to do just that. So when the crisis fades, will we all continue manufacturing in China as we’ve always done, or will we be forced, or will we want to, explore what a better alternative might look like?

Mexico has free trade

Ever since their manufacturing boom started nearly four decades ago, China has had various versions of near free-trade agreements with most countries. But in the US at least, that all changed when Trump became president in 2018. Trump, who had long accused China of unfair trading practices, promptly placed tariffs on more than USD $360 billion worth of Chinese goods, with the aim of encouraging Americans to buy local. China retaliated, and many US goods were also heavily taxed. 

Although the two countries are in continued negotiations and some tariffs have been removed, the US and China are far from reverting to anything close to a free-trade agreement. This, from America’s perspective at least, makes Mexico a very attractive prospect for manufacturing. Owing to the existence of NAFTA (the North American Free Trade Agreement), goods manufactured in Mexico don’t attract a tariff if imported. 

But Mexico’s advantage is broader than just with the US, says Diego De La Garza, Senior Director Global Services and Delivery, Corcentric. He believes that Mexico has an advantage not just with the US, but with the world:

To finish reading this article, join our exclusive Supply Chain Crisis: Covid-19 group. We’ve gathered together the world’s foremost experts on all things supply chain, risk, business and people, and we’ll be presenting their insights and daily industry-relevant news via the group. You’ll also have the support of thousands of your procurement peers, world-wide. 

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Coronavirus: What You Missed

Last week’s critical covid-19 news

New technologies gaining traction in the fight against Covid-19

If our supply chains are at war with the coronavirus, then technology is our ammunition … and it’s working. Right now, we’ve got every reason to be excited about the future of technology and how it can help us better mitigate risks. Some technologies are proving particularly useful, including AI and automation, reports EPS, as well as a suite of other digital technologies.

Toilet paper, renewables and restaurant supply chains still broken

By mid-February (which feels like aeons ago), Fortune had already declared that 94% of the world’s supply chains had been disrupted. Now, we believe that number would be closer to 100%. But there’s a number of supply chains that continue to make the news for the issues they’re having, including restaurant supply chains, renewables, and perhaps unsurprisingly, toilet paper.

Can China still be trusted as the world’s factory?

With some countries already planning their transition back to ‘normal,’ whatever that might mean for the future, many supply chain professionals are wondering, is now the time to start asking ourselves the big questions? Many say it is, and something that’s come up often is whether or not we can continue to trust China as our key manufacturer. 

It’s a contentious question, and many people have heated views on it. Read all the  compelling reasons why Kobus Van Der Wath, CEO of Axis Group, Beijing, believes China’s dominance will continue unabated in our latest expose, Can China Still Be Trusted as the World’s Factory?

Coronavirus vaccine trials start mid-May

In the best possible news Easter could bring, The New York Times is reporting that Norvavax, a Maryland-based biotech company, will start human trials of a coronavirus vaccine mid-May. It’s one of two dozen companies that have announced promising vaccine programs. The solution to end this pandemic might be closer than we think.

Want to keep up with the latest coronavirus and supply chain news? Join our exclusive Supply Chain Crisis: Covid-19 group. We’ve gathered together the world’s foremost experts on all things supply chain, risk, business and people, and we’ll be presenting their insights and daily industry-relevant news in a content series via the group. You’ll also have the support of thousands of your procurement peers, world-wide. We’re stronger together. Join us now.

Easter Procurement – How Do They Make Yours?

They have been a staple in the Easter diet for many children (and adults too!) for decades. But just how does Cadbury make the Creme Eggs we enjoy so much?


The humble Cadbury’s Creme Egg has been an Easter staple since its launch nearly half a century ago. Global sales of the eggs are over 500 million per year, with the UK alone accounting for approximately 200 million per year (that’s around 3 each per year in the UK), with the majority of these manufactured in Birmingham, UK.

The Creme Egg brand has a value in itself of £55 million, which certainly isn’t bad for a confectionery item that’s only available between January and Easter each year.

Like them or loathe them, Easter just wouldn’t be the same without the instantly recognisable purple, red and yellow packaging (or green, blue, red and yellow if you happen to live in the USA). It’s no small feat to produce the volume of eggs to satisfy global demand, at such a specific time of year to take full advantage of the condensed sales period.

Before we delve into the supply chain and production process, some facts about this famous egg…

All Gone a Bit Egg Shaped – Fun Facts!

In fact, all Cadbury-manufactured chocolate is banned in the USA, Creme Eggs amongst them. The Hershey Company has the rights to manufacture all Cadbury chocolate in the USA and the move was to limit competition with imported items.

This is down to the recipes being altered slightly to adjust to different tastes, as well as to account for some ingredients that are banned in certain countries.

More on this below, but let’s just say that it did not go well…

Not only are the Eggs themselves shrinking thanks to ‘shrinkflation’, but in 2015 the multipacks dropped from six to five eggs. But that probably helps with the next fact…

  • They are really unhealthy (but you knew that and it doesn’t really matter anyway).

Each egg contains around the same volume of sugar as two bowls of really sugary cereal. And at around 6 teaspoons of sugar, it’s what the American Heart Association considers to be a full day’s worth of sugar.

Raw Materials

The Creme Egg that we buy and eat today has been in production since its introduction in 1963. It’s recipe has been the same since this time, using the same key ingredients. There was a brief period in 2015 when Mondelez, who currently own Cadbury, and Kraft, their parent company, changed the recipe. This involved changing the use of Cadbury’s Dairy Milk chocolate for the egg’s shell to a cheaper, cocoa-based shell.

And much like the ill-fated New Coke recipe, the outcry was much the same. After much protest the recipe was changed back, but not before the organisation had seen a loss in sales estimated at £6 million in 2015. FYI, for those of you outside the UK, don’t get a Brit started on what their feelings are on Cadbury’s chocolate in general since the firm was taken over by Schweppes and then Mondelez!

The key ingredients we’re looking at here are, of course, cocoa and, in Cadbury’s own words, “a glass and a half of milk in each bar”. The majority of the milk in the UK, over 50%, is supplied by dairy farm co-operative, Selkley Vale farmers, from Wiltshire and Gloucestershire.

The cocoa is a bit more complicated and, in the past, a lot more controversial. As with most chocolate manufacturers, Cadbury sources its chocolate from countries with high volumes of cocoa production – Ghana, Cote d’Ivoire, Indonesia, the Dominican Republic, India and Brazil. Previously fully affiliated with Fairtrade, Cadbury drew criticism  of practices and its supply chain when it dropped this in 2016 in favour of a new scheme, Cocoa Life.

The scheme, which is, as of 2019 working in close partnership with Fairtrade, aims to use over $400 million to aid 200,000 cocoa farmers worldwide. Not only will this mean that more Cadbury chocolate is made from sustainably sourced cocoa, but farmers will still have benefits in line with Fairtrade goals, such as improved income, competitive pricing and tailored investment suited to their needs.

Cadbury has been able to leverage its supply chain well in recent years to provide a solid and stable foundation for its production in the UK, Canada and the USA. How do they go from that to the magic end product?

The Production

Ever wondered how Cadbury manages to get the very unhealthy, yet absolutely delicious, fondant filling into Creme Eggs? Had discussions over whether it’s an injection mould for the outer shells and then the fillings? Then wonder no more!

It’s actually quite simple really. The two halves of the shell are made separately and then filled with the fondant to create that ‘fresh egg’ look inside. The halves are then shut in a book mould to create the final product, that is then wrapped for sale. If you want to see everything in action, there’s a great video on YouTube (and below…) from Bloomberg on the full UK production process.

Probably the most bizzare thing in the whole production process, apart from the fact that there’s someone working for Cadbury whose job title is ‘Easter Shift Manager’, is that all of this happens in winter. Supply chains are year-round anyway, but production processes need to be done in such a way that the hundreds of millions of eggs are ready for shipping for the 1st of January.

There you have it – a brief history of, and the not-so-secrets behind manufacturing one of the pillars of Easter. Now, I don’t know about you, but we’re off to the shops for a few Creme Eggs before they disappear for another year…!

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