Shared strategies, route optimisation and contract protection important to risk mitigation
Supply chain companies need to be flexible in agreements and planning says SpendEdge
As demand rapidly adjusts to changing lockdown and economic conditions, companies need to improve oversight of their supply chains, work together and revisit contract terms says procurement intelligence company SpendEdge.
Development of mutual risk-sharing strategy with suppliers
The nature of the coronavirus impact on the freight and transportation industry and the interdependence between buyers and suppliers in this industry reinstate the importance of collaboration between both the parties to identify issues associated with transportation activities. One of the major areas where buyers and suppliers can collaborate in an effective manner is to constantly monitor new areas where quarantine measures are being deployed and identify alternate travel routes effectively.
Usage of transportation/warehouse optimization software by suppliers
The gradual blockade of transport routes owing to the coronavirus impact has made it essential for buyers to optimize their transport routes. On this note, it is advised that buyers use transportation and warehouse optimization software that will aid them to streamline their delivery routes and reduce fuel-related costs. Warehouse optimization software will provide insights to buyers regarding space availability within warehouses, enabling buyers to plan transportation activities based on their ad-hoc/medium term/long term requirements.
Revisiting contract terms
Commodity and energy prices are expected to undergo frequent volatilities as the coronavirus impact intensifies on the global economy. This should be the cue for buyers who account for significant investments on commodities and energy items to re-engage their suppliers and explore strategies to immune them from the price volatilities. In the freight and transportation industry, it is advisable to fix the short-term procurement price or at least keep a maximum limit on upside price movements.