BENEFITS OF SUPPLIER INTEGRATION A recent study1 on the early impact of COVID-19 on the supply chain showed that a large number of respondents experienced a need to intensify their cooperation with their supplier network to manage their supply chain and financial risks. The impact of the crisis underlined vulnerable interdependencies throughout the supplier network. Suddenly, it was no longer a unit cost game fuelled by supplier competition, but a game of survival threatened by the weakest supplier in the supplier chain. In short, the COVID-19 crisis has been a wake-up call for CPOs that have realised that a resilient supply chain requires closer cooperation with their suppliers. Several of the CPOs participating in the study shared their experiences of working more closely with their suppliers and gave examples of how knowledge-sharing helped mitigate immediate constraints in production. Others explained how immediate changes in payment terms helped their suppliers with their financial capacity during the highest peaks of the crisis. Several CPOs expressed that the increased knowledge-sharing had revealed room for optimisation in cost drivers such as freights costs. CPOS IDENTIFIED SEVERAL BENEFITS OF CLOSER SUPPLIER INTEGRATION 1. Shared management of supply chain and financial risk to ensure resilient supply chain set-up 2. Working capital reduction and improvement of cash outflow 3. Productivity and cost-out 4. Improved sustainability footprints throughout the value chain 5. Increased innovation and quicker NPI (new product introduction) 1 Valcon/DILF survey on Procurement during Covid19, 2020 3
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