Out-Law Guide | 06 May 2020 | 2:53 pm | 4 min. read
While suppliers in China may now be ready to resume deliveries, original equipment manufacturers (OEMs) and other tiers of the supply chain may not yet be able to re-open or may simply not have the demand due to the economic climate.
The operations of most businesses rely on efficient and coordinated supply chains. Businesses need to grapple with the challenges of re-aligning supply and demand to balanced levels as different parts of the world begin to return to something approaching normal.
Re-engaging with your customers promptly will be critical. Businesses will want to get early insight into their customers’ likely demand curve and forecast requirements. Bear in mind that this could be a significant shift from pre-pandemic order levels - either up or down - and there may be bumps in demand depending on how the customer, and its own customers, are returning to trading.
Businesses need to grapple with the challenges of re-aligning supply and demand to balanced levels as different parts of the world begin to return to something approaching normal.
Ongoing, pro-active account management will not only help you to manage demand but also gain a competitive advantage. Sales or account teams may need additional training and guidance to ensure that they are serving customers consistently, and that the information flow within your organisation is efficient.
Once you have established who your most significant customers are and have resumed contact with them, you should consider the overall terms of that relationship and whether any adaptations need to be made. These might include:
You will also need to re-engage with your suppliers. In many businesses, an effective and efficient supply chain is critical to the success of the business and its ability to meet customer demand.
Identify your critical suppliers. For each one, you will need to assess how that supplier has been affected by the pandemic and what its position is now. For example:
It will be important to get an accurate picture of your suppliers’ ability to perform across the supply chain quickly. If 90% of the supply chain can operate but the 10% that can’t includes a critical component, this can still grind your business to a halt. Alternative options may need to be considered quickly.
Once back up and running, it will also be important to manage the supply chain on an ongoing basis. Many businesses will have been significantly squeezed as a result of Covid-19, and supply chain failure will remain a risk to businesses going forward. See our Out-Law guide: Coronavirus: managing supply chain failure risk as lockdown eases.
01 May 2020
13 Mar 2020