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Wed June 03 2020

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Arcadis' eight-point plan to protect supplies

15 Apr Quantity surveying and project management firm Arcadis has prepared an eight-step plan to enable construction and other businesses to respond to the economic crisis, recover quickly and build resilience to risks in their supply chains .

 The plan is contined within Arcadis’ latest quarterly report, Spring Market View: Into the Unknown
The plan is contined within Arcadis’ latest quarterly report, Spring Market View: Into the Unknown

As you might expect, it is laden with business jargon that may seem unfathomable to normal human beings but it may prove useful to those who can translate it. Essentially, the Arcadis plan is to list all the risks in your organisation’s supply chain – anything that could possibly go wrong – and devise ways of solving or getting around the problems before they occur.

Here it is in full.

Secure supply in the short term

1. Tactical scenario planning. 

Assess levels of inventory, capacity of available resources, and deliverability of goods needed to respond to immediate requirements. Develop and analyse scenarios that account for demand uncertainty and potential supply chain constraints.

2. Secure essential resources.  

Compile schedules of essential resources, materials, and products required for business continuity. Beware of the less obvious risks further down the supply chains. Plan to mitigate price spikes in the event of a capacity contraction.

3. Mitigate operational and programme risks

Plan action to manage residual risks that cannot be eliminated. Based on a risk assessment, discuss rescheduling or de-scoping of work with the client and project team. Review relevant contract clauses (insurance, payment, force majeure and frustration). Consider if any changes can be made that will support business continuity, for example extensions of time and revised payment terms, or even direct financial support for critical suppliers.

Accelerate the recovery

4. Accelerate supplier management. 

When the crisis subsides, active leadership and strong supplier relationships will be essential to re-establish work programmes and to clear backlogs as quickly and efficiently as possible. Clear, reliable demand signals, advanced orders, capability development, and improved payment terms are all levers to consider.

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5. Refresh business continuity management plans.

Review and update the pre-existing business continuity plans for readiness to accommodate future shocks. Include tools such as home working infrastructure and emergency command and control structures. Consider the maturity of a business continuity approach when selecting new suppliers.

Prepare for a post Covid-19 world

6. Embed resilience. 

Consider the various options for embedding future resilience, such as redundancy (increased stocks, spare capacity, and supply competition), resistance (automation, so shocks no longer have an impact), and improved recovery (rapid response protocols).  Commercial mechanisms can also be used to increase reliability, for example via improved payment terms which reduce suppliers’ cashflow exposure.

7. Strategic supply chain mapping. 

Implement a whole-system approach to create strategic supply chain maps for critical programmes and spend categories. The maps can be used dynamically to identify possible points of failure in the event of future shocks and enable strategic category management. These steps will allow buying organisations to be more informed about barriers to innovation, efficiency, and competition in their supply chains.

8. Digitise supply chain management. 

The implementation of smart forecasting and analytics will enable more effective decision making. Cloud-based systems using advanced analytics to manage strategic supply chains will enable organisations to evaluate the effectiveness of existing resilience measures, identifying additional mitigation steps where needed. 

So many aspects of capital delivery have been disrupted by the Covid-19 crisis, Arcadis says, that it is difficult to highlight where ‘lessons learned’ initiatives should be focused.

It concludes: "Supply chain resilience is a good area on which to focus, because of the wider opportunities to improve performance. The eight steps we recommend form a programme; they reinforce one another and rely on strong leadership and effective collaboration for successful implementation."

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MPU
MPU

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