Supply Chain Beat
  • Logistics
  • Procurement
  • SCM
  • Technology
  • Warehousing
No Result
View All Result
Supply Chain Beat
  • Logistics
  • Procurement
  • SCM
  • Technology
  • Warehousing
No Result
View All Result
Supply Chain Beat
No Result
View All Result
The Three Biggest Mistakes Procurement & Supply Chain Leaders Must Avoid As Recession Looms

The Three Biggest Mistakes Procurement & Supply Chain Leaders Must Avoid As Recession Looms

Share on FacebookShare on Twitter

As a Coronavirus-induced recession looms large and as companies scramble to position themselves to weather the storm, GEP gathered guidance from clients adversely impacted by the supply chain disruptions. The challenge for organizations is to navigate unprecedented disruptions and prepare for an economic downturn.

“The key is not to make matters worse by solving short-term supply chain issues but ignoring initiatives to improve cash-flow to strengthen their company, because the light at the end of the tunnel is an oncoming train,” said John Piatek, Vice President, GEP Consulting, CPG and Retail.  

The three most common mistakes chief procurement and supply chain leaders must avoid right now:

1.     Not Rapidly Cutting Costs and Securing More Cash:Purchased and supply chain costs typically account for 50-80% of global manufacturers’ total cost structure. In the immediate term, supply chain costs will increase as manufacturers expedite shipping and pay overtime labor costs to meet customer commitments. However, leaders must improve cash-flow and bolster working capital now, in order to provide greater financial flexibility going forward, by:

  • Lengthening payment terms on all non-essential items. Even by a few days can make a big impact.
  • Postponing or canceling capital purchases.
  • Being more forceful about what the business “needs” vs. what the business “wants.”
  • Discontinue low-running SKUs and engage suppliers to offer discounts on the remaining business.
  • Linking cost reduction programs to real, measurable EBITDA outcomes.

2.     Not Accelerating Supply Chain Agility: With access to supply dominating the headlines, there will be a tendency to avoid making hard choices to increase supply chain agility. Leaders need to accelerate plans to diversify supply chains geographically and avoid a total loss of supply in the future. These shifts are not quick, but steps need to be taken now to build agile supplier partnerships and infrastructure.

3.     Not Prioritizing Sustainable and Structural Cost Advantage: While immediate, draconian cost cutting initiatives will provide short-term results, companies find that they’re not sustainable. To create structural cost advantages, augment the traditional source-to-pay (S2P) process with budget-to-pay (B2P). This will enable procurement and finance to check every request/requisition for budget availability prior to committing spend to external suppliers, and drive cost control and financial discipline aggressively.

Next Post
ThroughPut Inc.’s ELITE Now Available in the Microsoft Azure Marketplace

ThroughPut Inc.'s ELITE Now Available in the Microsoft Azure Marketplace

Latest Articles

Procurement Solutions Help Businesses Shift to New Normal

Procurement Solutions Help Businesses Shift to New Normal

April 29, 2020

Shark Tank-like Contest Will be Held by NIH to Ramp Up Testing

April 29, 2020

Accelerate Recovery from COVID-19 Supply Chain Disruption

April 29, 2020

Maersk Offers Weekly Rail Service from China to Turkey

April 29, 2020

BP Donates Jet Fuel to COVID-19 US Relief Efforts

April 29, 2020

UPS and Michaels Offering Consumers a Safe and Secure Option to Pick Up Packages and Drop Off Returns

April 29, 2020
Advertisement BannerAdvertisement BannerAdvertisement Banner

EDITOR PICK'S

ThroughPut Inc.’s ELITE Now Available in the Microsoft Azure Marketplace

April 29, 2020

The Three Biggest Mistakes Procurement & Supply Chain Leaders Must Avoid As Recession Looms

April 29, 2020

Procurement Solutions Help Businesses Shift to New Normal

April 29, 2020

Shark Tank-like Contest Will be Held by NIH to Ramp Up Testing

April 29, 2020

Accelerate Recovery from COVID-19 Supply Chain Disruption

April 29, 2020

Maersk Offers Weekly Rail Service from China to Turkey

April 29, 2020

BP Donates Jet Fuel to COVID-19 US Relief Efforts

April 29, 2020

Stay Connected!

Subscribe to Supply Chain Beat

  • Please choose the newsletters you would like to subscribe to.
  • Enter your work email
LinkedIn Twitter

About Us

  • About Us
  • Contact Us
  • Subscribe
  • Contribute
  • Terms of Use
  • Privacy Policy

Topics

  • Logistics
  • Procurement
  • SCM
  • Technology
  • Warehousing

Business Beat Media Network

  • CIO Beat
  • CFO Beat
  • Global Trade Beat
  • Manufacturing Beat
  • Utility Beat

© 2019 Business Beat Media, LLC. All Rights Reserved.

No Result
View All Result
  • Logistics
  • Procurement
  • SCM
  • Technology
  • Warehousing

© 2019 Business Beat Media, LLC. All Rights Reserved.

This site uses cookies. To see how cookies are used, please review our privacy policy. If you agree to our use of cookies, please continue to use our site. Find out more.