The Importance of Supplier Management During Times of Disruption
Managing disruption is an ongoing management activity that in many cases starts with a modified strategy that is then enabled through a set of objectives. The disruption caused by the COVID pandemic was, and still is, a disruption of epic proportions. There are numerous industries that had to evolve and transform overnight to mitigate operating model risk and, in some cases, to survive.
Many of these industries have changed permanently. During a major disruption, organizations adjust their go to market strategies, project investments, infrastructure and workforce skills. There is a general concern with how suppliers are contractually structured to support these changes and what exposure to risk may have been created. It is likely that the new operating model will have an impact on the suppliers’ contract scope, service delivery model, operating costs and general terms.
Initiating a three-step health check assessment will yield opportunities to realign scope, mitigate risk and optimize contract cost. The first step is to update the supplier strategy. This does not need to be a large effort, but it is critical to identifying key changes. Once that is completed, the next two steps can be completed in parallel: identification of changes to the supplier management processes and assessment of the contract portfolio against new requirements. The figure below provides additional details:
