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How To Manage Your Diverse Suppliers and SMEs During The Coronavirus Crisis

In this five-part series, PASA will explore different aspects of supplier management and how to navigate them during the ongoing coronavirus pandemic. Who is being impacted the hardest, how do you protect your supply chains, what are the best ways to manage your suppliers and what precautions should you be taking?

In part one of this series, PASA outlined the key issues at play when it comes to keeping on top of your supply chain.

In part two, PASA explored how supplier contracts are affected by coronavirus.

In part three PASA explores ways procurement might support their diverse suppliers and SMEs during the coronavirus crisis. 

During this crisis, diverse suppliers and SMEs will be disproportionately affected. They’re more likely to struggle with increased demand for their services and more likely to be impacted financially. So how can your organisation best support them?

Firstly, it’s important to differentiate your diverse suppliers from your SMEs. Don’t simply group them into the same category because the criteria for defining them vary enormously. Let’s start by focussing on diverse suppliers.

If you haven’t yet taken the time to consider or implement a strategy for managing your diverse suppliers throughout this crisis, now is the time to give it some serious thought. Here are four steps you might consider taking to ease their stress during this difficult time.

1. Identify your diverse suppliers

Firstly, if you’re not already aware of who they are, you’ll need to take some time identifying your diverse suppliers. There are third party companies who can do this for you by cross-referencing your supplier base with their database of certified diverse suppliers. Companies offering this service include Dun & Bradstreet, Beroe and Thomas.

2. Reach out to your diverse suppliers

Once you know who your diverse suppliers are, you need to establish a standardised way to reach out to them. Assure them that you are keen to provide help and support where possible and collect crucial information about their current position. For example, it is important to ask find out about your diverse suppliers’ business continuity plan and financial situation.

3. Establish how your organisation might be able to help diverse suppliers

The information gathered from your diverse suppliers will help you decide the best ways in which to help them. This might include:

  • Expedited payment terms.
  • Providing paid sick leave (in many countries sick leave is also subsidised by the government).
  • Switching from a deliverables based contract to a time and material based contract.

4. Consider financial bailouts

If you have a particularly strong relationship with any of your diverse suppliers who are really struggling, you might consider financial bailouts or credits, such as paying them in advance for a few months’ work.

Helping out your diverse suppliers might be the top priority, but it’s possible that you will also have resources left to assist your SMEs. Recognising SMEs is much harder due to the multiple definitions adopted by governments, organisations and professional bodies. Plus, during these times you might wish to redefine your criteria altogether based on what makes sense for your organisation right now.

Because circumstances are changing rapidly, it is absolutely crucial that you continue to check in with your diverse suppliers and SMEs throughout the coronavirus crisis, and beyond. With many economists predicting a great depression, it could be a long time before the world returns to business as usual.

In part four of this series, published next week, PASA will advise on how to conduct a thorough risk assessment of your suppliers during this time.

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