How to build diverse supply chains to increase resilience

Building diversity into your supplier base can drive resilience by increasing innovation, gaining flexibility and enhancing competitive edge, but doing so requires going back to basics.

 Covid-19 changed the way buyers perceive resilience, panellists at the CIPS Sustainable Procurement Summit said.

Head of food procurement and supply chain at food service provider Sodexo, Aoife Wycherley, said diversity is now “necessary” to maintain resilient supply chains.

Wycherley said: “We are so confident that resilience and a diverse supply chain are linked. It supported us through Covid, and it supports us every day ensuring we get food to our hospitals. A diverse supply chain is necessary to give us thorough resilience.”

The move from just-in-time sourcing strategies to just-in-case following the pandemic has shaped how buyers perceive risk.

He said: “Just-in-time supply chains, and traditional methods of stockholding, are just not going to be what the future looks like. There will be some closer supply chains, offset against the cost of increased complexity."

NHS Supply Chain CEO Andrew New, said that prior to Covid, procurement had “assumed a lot of things about resilient supply chains that don’t exist any more”.

NHS Supply Chain is now looking for new innovations to challenge traditional ways of working, and he said diverse suppliers could provide “different ways of thinking and different ways of working”.

“Innovation is a key part of why we need a diverse supply chain,” he said. “What we need to understand is diverse suppliers can create different relationships with different levels of reliability, to give us more surety of our ability to deliver exceptional care. 

“For us to have a truly high-quality supply chain end-to-end, we need our suppliers to embrace diversity across their own supply chains.”

In order to build diversity, New explained NHS Supply Chain was “redesigning its approach to the supply chain”, with an emphasis on going “back to basics”. Where suppliers needed support on diversity, New said NHS Supply Chain was able to provide infrastructure for stock holding, or improved payment terms. “This lets us broaden our net of high quality, qualified suppliers. The key is, it needs to be designed in before we start tendering things, before we start asking for proposals, or we’ll just drown smaller enterprises in opportunities that never come off the other end.

“This isn’t rocket science, this is getting it back to basics. If we need to design a supply chain with a certain amount of capacity, innovation, the things we’re looking for, we then create the appropriate opportunities and make sure they’re afforded to all different sorts of organisations.”

New added that just awarding contracts to diverse suppliers is “relatively easy”. The difficulty comes in providing support over the course of a contract.

“Maintaining it over an enduring period, when the needs of the organisation can change dramatically, and the behaviours of those organisations are going to change, is a challenge. So we move quite rapidly from our sourcing activity to our supplier management,” he said. 

He said they support a number of diverse suppliers through management programmes and development activities to “support those who don’t have the infrastructure and capability to operate at the national level.”

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