Many organizations have disinvested parts of their manufacturing and production capabilities over the past years. It was mostly labelled as ‘focus on core activities’ to create cash (carve-outs) or due to market pressure (more competitive suppliers). With the created vulnerability being clear to executives, some decisions might be re-evaluated.

As a procurement and supply chain executive, your role is to support this decision-making by:

Assessing the market risk for each commodity

Providing transparent pricing (internal and external) to the decision makers

Evaluating other options of reducing the risk for your supply chain (see Inventory Management section)

While a vertical integration can be sensible for raw materials, indirect goods such as PPE (Personal protective equipment), will require a different strategy. Either we apply the approach mentioned in “Inventory Management” or we go back to the basics of sourcing and ensure that suppliers do not take advantage during a disruption, e.g.:

Ensure you ask for the right specifications

Request certifications and client references

Get multiple quotes if possible and qualify additional suppliers

Understand the total value / size of the company

There have been many fake and overpriced products on the market. With speed and cash protection being crucial, companies need to be prepared to source critical products from multiple suppliers quickly and thoroughly.