Covid Truths or Myths: Chaos and piracy in the supply chain, turning the DSO screws and bottling pay equity

Posted on April 14, 2020


Every Monday morning, I invite you to share your opinion regarding some of the more exciting and thought-provoking stories from the past week on how the COVID-19 pandemic is impacting procurement and supply chains.

The purpose of this exercise isn’t to merely “shoot the breeze.” The whole idea is to stimulate meaningful discussion about the changes that are certain to happen because of COVID-19.

Everything from the emergence of the remote procurement professional and governments controlling supply chains to the growing belief in protectionism will be covered.

When it comes to the future of procurement and supply chains, nothing is off the table at this point, so feel free to let loose!

Chaos and Piracy

In describing the state of the current Personal Protective Equipment or “PPE” supply chain, CBC News used words like chaos and piracy. Canada’s Deputy Prime Minister Chrystia Freeland even went as far as to suggest that “It is really a Wild West when it comes to buying medical supplies right now.”

According to reports, rival governments are sending private planes with representatives on board who are carrying “suitcases stuffed with cash” to hijack supplies as they are “being loaded” on planes for shipment to other customers. Reminiscent of a back alley deal only this time in “plain sight,” these questionable transactions are taking place on the tarmacs in China.

With the price of the coveted supplies increasing even faster than the demand, one can only wonder when this will come to an end. Of even greater importance will be the rest of the world’s attitude towards maintaining a continuing and significant reliance on China as a critical product source.

For the record, the U.S. imports half of its total volume from five countries: China, Canada, Mexico, Japan, and Germany. The goods – capital and consumer, could be made in the U.S.; however, these countries produce the same products either cheaper or of higher quality.

Even if there is some lingering animosity towards China capitalizing on the high demand for its products, the fact is that repatriating supply chains to domestic manufacturers is not an easy task. Once again, it will be interesting to see how this plays out over time as well as when we are on the other side of this current crisis.

DSOs and Contract Management Software

When we are living in times of prosperity, everyone is amiable, equitable, and in good spirits. Win-win relationships are more comfortable to build and maintain as there is a general feeling that there is enough to go around.

Conversely, when we encounter a period of turbulence where the spirit of goodwill is “clouded” by fears of compromising cash flows and a sense that one’s comfort – even survival is at stake, all bets are off.

So, here is the question; during the COVID-19 crisis, are advanced contract management solutions “CMS” a builder or destroyer of buyer-supplier relationships?

Like any powerful tool, it depends.

CMS can provide needed intelligence across your contract database to assist in making sound decisions regarding the ongoing viability of your supply chain during a crisis.
One critical area is in the provision of timely insights into force majeure clauses, including your options when a supplier or suppliers are unable to meet their obligations.

Another is an ability to reassess the impact of extending payment terms in the context of current cash flow realities.

When it comes to supplier relationships, such capabilities can be either a collaborative tool or a club, depending on your approach and mindset. In short, are you still going to be a good partner with your supplier in the tough times like you were when times were good?

The Pepsi Generation

What do questions of pay equity have to do with Pepsi?

Tealbook CEO Stephany Lapierre’s recent LinkedIn post regarding her grandmother hosting a group of businessmen from Japan eager to learn about the supply chain in 1964 immediately comes to mind.

As the owner and president of a Pepsi Cola bottling and distribution facility in the sixties, Stephany’s grandmother was a trailblazer. On a side note, the apple doesn’t fall far from the tree as Stephany is following a similar trailblazing track with Tealbook.

The question I have is that given women’s significant business contribution and success – Stephany’s grandmother sold her company in 1991, why is pay equity still a thing in 2020 – especially given the increasing demands on supply chains and ALL procurement professionals during this crisis. Isn’t it about time that we base pay on merit and not gender?

Of course, before we can address the pay equity question, we need to deal with the equal opportunity issue. Specifically the fact that in the January 2020 Supply Chain Digital Top 10 Procurement Executives Worldwide list, only one woman “made the cut” – Karen Dawson.

We have to do much better than one before we can even consider ourselves as an industry in which equality exists.

A Final Note

It is once again an honor to have made the Thinkers 360 Top 50 Global Thought Leaders On Procurement list.

As a follower of Procurement Insights these many past years, you are a big part of that recognition. Thank you!

Posted in: Commentary, COVID-19