It’s Monday—your category manager for rare earth metals phoned twice. Then texted a quick SOS. Then emailed—not only you—but your supply chain risk manager and your finance director.
A supplier went out of business overnight.
And because they didn’t communicate their financial position—there was no time to mitigate, no time to source alternatives, and no time to help them stay in the black.
Meanwhile, the last train from Almaty has arrived in Vladivostok with next week’s cargo (the final materials from a now-ghostly supplier). But despite an iceless winter, port congestion has created a waiting line that could last a month, and the still-laden ships (the ones that are supposed to pick up your now-final shipment) are only too happy to sit in line—collecting demurrage.
You call a meeting. The category manager mentions that there are three other suppliers who might be able to keep the chain in-tact. But even on the surface, they differ widely (namely, when it comes to locale—one based out of Canada, another in Chile, and the third in China).
And you already know that there are inherent risks in all three—because none were your category manager’s first choice. The relationships aren’t solid. The trust hasn’t been built.
You know that you and a cross-team task force need to make a decision (and quickly).
So where do you begin?
- Communication: you know you’ll need an objective way to compare all three potential partners, through a common data-based language and assessment tactic that will bring your category manager, finance director, and supply chain risk manager to consensus.
- Benchmarking: to know where the previous supplier stood, the team needs to understand how they might have matched up against their industry peers—despite not getting the financials from that player in the past, you know that there are two public companies that you can use to create a quick frame of reference.
- Insight: to support consensus-building under an established benchmark, you’ll need trustworthy data from each of three alternative suppliers on the list—sourced directly from them (they’re all private), with advanced analytics that can distill down financial statements into digestible information for the full task force.
- Foresight: by combining internal alignment with a frame of reference and the financials of the other suppliers, you can now start a new business relationship—armed with telemetry and trust—whereby your team will not only have advanced warning on deterioration with a chosen supplier, but also the tools to have continuous, meaningful, and transparent conversations to mitigate any potential disruptions in the future.
In the pandemic era, scenarios like this are becoming more common. It’s critical—not only for your business, but also the financial health of your suppliers—that you and your teams have access to modern tools that not only help you find opportunities in disruption, but give you options to avoid disruption, altogether.
With all of this in mind, we’ve built an advanced set of solutions for procurement leaders based in a common, data-based language, so that your business isn’t just mitigating, reacting, and shoring-up—but planning, monitoring, and thriving (along with your critical supply chain partners). And there’s still time before 2021 to get those resources in place.
Request a free FHR® report on a current supplier and learn more about how RapidRatings can empower procurement leaders—and the teams they support. After all, it's Monday.