Category management and supplier relationship management were critical for Co-op Insurance to maintain service provision to customers during the Covid-19 pandemic.
Andy Johnson, general manager of supply chain and continuous improvement at Co-op Insurance, told SM the firm had recently completed work on category management in its motor repair supply chain after identifying shortcomings in its network.
“There were certain groups we were overexposed to. We felt we had a risk that if something happened to those repairers, we'd have a problem from a customer service perspective. We were also concerned that we didn't have enough capacity in the network to meet spikes in demand,” he said.
In order to manage this risk, the firm reviewed its category sourcing approach and designed how an optimum network should look, establishing a new relationship with a third-party network to manage repairs as a contingency.
Establishing the contingency network ahead of time allowed Co-op Insurance to maintain capacity throughout the Covid-19 pandemic despite many repairers being forced to close their doors in the early stages of lockdown.
“We had a large number of repairers starting to close down and when they did, they did it on a relatively immediate basis. We ended up with about 10% of our repairer capacity in Scotland and over the course of the next week or so, we lost capacity in England and Wales as well. At one stage we were down to about 65% capacity,” Johnson explained.
“Even though there were less cars on the road, we still had to provide a service to our customers so we called on the contingency repair network and worked with them to try and physically get repairers in the places where we need them.
“It was pretty challenging and we had some challenging conversations about trying to get new repairers on board when the third party network had never worked in that area before. Through agility and speed, we've managed to maintain the capacity all the way through.”
Johnson added repairers that had been able to remain open still had high core costs and so Co-op worked on accelerated payment terms.
“We put in a process where we could accelerate payment terms so we were making smaller, more frequent payments to repairers to get the cash into the business. We also looked favourably on any request for additional funding for PPE and cleaning,” he said.
Johnson added Co-op’s home supply chain also faced challenges when the lockdown in the UK put a stop to physical visits to customers' homes. Prior to Covid, the firm had launched an SRM programme with a focus on growing strategic relationships with suppliers.
“We had to work with our primary supply chain to make sure we were all consistent and that everybody was applying the same approach. We wouldn't have been able to do that without those deep-seated relationships, because we're having conversations at a strategic level about the impact on ultimately their business and our business as a consequence of this,” he said.
“We were then very quick to move to alternative solutions where a physical visit wasn't possible. And we moved quickly to implement digital solutions so we had to be agile and move quickly.”
Johnson added while Co-op had never predicted that Covid would happen, it was already looking at its supply chains from a risk perspective and had already built solid relationships with suppliers which enabled the business to continue.
“We had already successfully derisked our supply chain before we got to this event. That's really important. There's got to be a perpetual review of supply chains from a risk perspective.
“You can't dismiss or downplay the benefit of good strong supplier relations. That enabled us to move fast. It's okay to take risks and implement things quickly. Ultimately, as long as you you've measured the risk, you can learn and adapt after the event.”
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