The coronavirus outbreak is having a profound impact on every business’ supply chain. The U.S. manufacturing PMI indicated the worst contraction in production, new orders, and employment since the 2008 recession. Nearly 75% of companies report supply chain disruptions in March, a number most expect to rise further.
The primary goal of a procurement function to achieve savings carries greater significance in a recession when obtaining the lowest cost possible needs to be balanced with not compromising the quality of products and services delivered by suppliers. A secondary goal could be supporting major technology transformation projects. These goals are made more difficult when economic disaster strikes.
Businesses must ensure they understand what can be done remotely in relation to the signing of documents. They should also now be re-visiting contracts and opening dialogue with other parties within the supply chain to understand the potential impact Covid-19 may have. This planning is imperative to ensure business continuity, that relationships remain commercially viable and that disputes are avoided. Uncertainty does not absolve directors of the need to act in the business’ best interests.