Top three ways companies can manage a procurement and supply crisis

For instance, we’re getting a lot of content from various news outlets about oil prices, about an energy crisis and about fertiliser, but not much about helium. And yet a third of the world's capacity of helium comes from the Middle East, and it degrades quickly. Helium is very heavily involved in the manufacture of a lot of technology and in the manufacture of medical equipment. It’s also used in cooling.

Its price has gone up considerably, and if helium sits deeper in your supply chain than you first thought, this could have some severe long-term implications. This means you should understand the sub-tiers within the supply chain as best you can, if you don’t already. While you need to recognise that you can't do it for every product immediately, it is really important to do so with the ones that make the most money.

Anyone reading this will say that it's completely impossible and can’t be done. I agree that it’s impossible to get a completely accurate answer in many cases, but I use the analogy of chess. As a procurement director, if you don't map your multi-tier supply chain, it's as though you can only see half the board, because you’ve only got a clear picture of tier one.

You aren’t going to win a game of chess under those circumstances, when you can't even see where your opponents are. By at least attempting to uncover a level of insight into the multi-tier supply chain, you might be peering through fog a bit, but some parts will be much clearer. Isn't it better to have 50 or 60% visibility than none?

Two: take your seat at the table

The second piece of advice is to enhance the quality of your communications. I'd like to think that procurement teams are doing this already, and one of the ways they can do so is by having more regular meetings with more teams. I suspect those meetings are daily at the moment, and resources can come from encouraging everyone to talk.

For instance, you will need to have full board support to guarantee those resources and additional funding, because the crisis will need a board-level response. That is an imperative. The fruits of the mapping exercise, and the knowledge that you have gained from doing it, will help you make your case more clearly.

There is also a need to see this crisis in a cross-functional way. You certainly need the finance team to understand the profit implications behind the current situation and your proposed solution. They will be the ones who make it possible to spend money on whatever it is that you need to try and get ahead of the curve.

Sometimes you're too late for this, but even in the medium term, you’ve still got to react. You’ve still got to keep your production lines going with a third less helium, less aluminium, or less fertiliser. With so many things, the world's capacity is going down, and you've got a supply crisis you need to come to terms with now.

Three: investigate, audit and understand SMEs

The third and final point is that at the bottom of many supply chains, you’ll find a whole host of SMEs. Many of them are already under massive financial stress, and another significant energy spike will drive many of them out of business. The question is whether the companies they deal with are aware of that and what their plans might be.

If a small widget manufacturer for that car you're building stops producing their widget, you can't get your cars out. How are you monitoring those financial exposures amongst your SMEs? This goes back to my first point. If you've started to map those key suppliers for your products, that's a really positive starting point, and no matter when you start to do it, the process will leave you in a much better place.