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Posted May 21 2020
Written by Createch

How to Manage The Supply Chain in Times of Crisis? (3/7)

Serie: Covid-19, what happens next? How to prepare your business in 7 steps | Episode 3 / 7

Sourcing in a black swan event

What is a black swan event? It is an event so rare and unusual it cannot be anticipated. Covid-19 is a black swan event for global supply chains. Virtually every global company has indicated that the virus has affected their supply chain and sourcing efforts.

With the media predicting that the Covid-19 outbreak marks the end of multinational sourcing, how does a smart business get in a better shape today and be more resilient in the future?

In the world news today, these are the headlines that keep popping into our phones or TV screens:

  • Vietnam has temporarily stopped exporting rice in hopes of easing domestic food shortages;
  • Thailand has banned egg exports amid domestic supply concerns;
  • Export bans and supply chain disruptions are causing global shortages and soaring prices;
  • The United Nations warns that a worldwide food shortage could hit by April or May;
  • China set to lose out on production of 1M vehicles as coronavirus closes car plants.

It is true that the globalization that we know today has made the world much smaller, the shift has benefitted businesses of all sizes and industries. However, globalization brings an additional level of risk to business heavily relying on cross-border sourcing. `Lean manufacturing` and `just in time delivery` are all beautifully crafted approaches in supply chain that help us to keep our inventory costs in check and increase efficiency, but do they really deliver in a black swan event?

The spread of the virus presents serious health concerns around the globe, but with it comes a cogent opportunity – and risk. Think about the disruption it has caused our manufacturing industries, and those relying on sourcing parts from China for example while the entire world is shutdown. Or how about a company in the business of supplying personal protective equipment? Your business is soaring, and this is an event that you haven`t anticipated but presents a life-time opportunity.

In this edition, we are going to explore how you as a business can build a more resilient procurement department and optimize your sourcing efforts during this difficult period.

Supply Chain_Sourcing_Supplier_Covid 19 what happens next_How to prepare your business in 7 steps_CreatechStaying ahead of demand – Real-time Analytics

If you rely on demand history in a certain period to predict your current demand levels, your numbers will simply not match in this time period. As demand for certain products soar in different categories, your company needs to know how to plan for such a demand spike.

There are now a lot of very comprehensive analytical tools in the market, and this is where technology comes in to play. Analytical reports can analyze your granular data and give you estimate of your current and future demand.

What-if scenarios can be accomplished by looking at different points in your current operations including your Points of Sales, online orders, your inventory levels and your supplier risk profile. Technologies such as Internet of Things (IoT) and Machine Learning (ML) are sophisticated technologies that can be leveraged to your favor to make better decisions.

As many supply chain challenges are time, cost and resource constraint, machine learning is an ideal technology to solve these issues. For example, analyzing many different data sets such as marketplace environment, trends, promotions, a spike of demand, sales and historical analysis can be achieved by machine learning.

What is important to know here is that analytics solutions, ML and iOT  are not a stand-alone software, they are more like the final product of an extensive Enterprise Resources Planning solution that embeds your entire operations from modules that span budgeting, finance to your labor force or HR, and finally your supply chain.

Supplier risk – Supplier Lifecycle management

Managing your supplier risk profiles and quickly finding alternative source of supply requires making quick decisions that are not later regretted. With the right set of tools, you can make these decisions quickly and with accurate data.

There is software that follows supplier risk profiles and alert you whenever one of your suppliers is mentioned in the news across the globe. Some dashboards for example can track up to 700k news sources to make sure you get all the updates available from different sources on your suppliers.

 There are more than 30+ types of incidents that can be tracked including:

  • Plant Disruption;
  • Deteriorating financial situation;
  • Transportation issues;
  • Compliance issues.

Sourcing_Supplier_Covid-19 what happens next_How to prepare your business in 7 steps_CreatechThese risk incidents will also trigger a calculation to determine your supplier risk profile score to give you an idea if the supplier you are dealing is a low, medium or high risk. The dashboards enable users to easily view risks and follow key countries that may pose a risk to the business and / or supply-chain.

Sourcing – Finding new sources of supply

As the world leaders are pushing for sustainable and in-house sourcing, how can you quickly switch to a new supplier with an unprecedented soar in demand? A quick Google search is not good enough these days to give you accurate supplier profiles reviews. You need a solution to help you determine what is your best option with regards to your sourcing strategy and your risk tolerance.

With this technology, you can easily source and find suitable suppliers, bring them back to your current ERP system, and manage their risk profiles all while a true collaboration from the backdoor.


Businesses depending on global sourcing are facing hard choices in crisis management amid the huge disruptions caused by the pandemic today. As the outlier event has amplified the supply chain problems in the world today, technology plays a critical role in managing risk.

Now that the virus has exposed vulnerabilities and ultimately changed the way we operate our supply chains, it is the right time to invest or enhance your IT infrastructure if you can.

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