SCRM in Crisis Situations

The basis of the concept is SCRM and its organizational integration. To this end, companies should implement a systematic SCRM process in the specialist departments of the supply chain (e.g. purchasing, logistics, production, quality management, sales, etc.). The information from these processes should be combined across departments in order to exploit synergy effects and possibly implement measures jointly. The goal is to increase the effectiveness and efficiency of the processes by allowing all departments to benefit from a better information situation and to avoid measures with negative effects on other departments of the company. For this purpose, the digital mapping of process steps is advantageous, as this allows all information to be brought together digitally and made accessible to the relevant persons or employees. In this way, the company actively promotes the internal exchange of information and ensures transparent documentation of the risks and measures as well as the underlying processes. With the help of these measures, SCRM and risk management in general should be actively integrated into the structures and decisions of the company in the next step in order to establish a risk-conscious culture among all employees of the company. In the course of this, it is of great importance, particularly with regard to crisis situations, to implement clear decision-making structures and an awareness of the need for rapid decision-making paths in crises within the company.
Good and comprehensive SCRM is to be implemented iteratively in six steps and can be done systematically using standards, guidelines and best practices. For more information please refer to our SCRM Overview incl. the six steps, to the ISO 31000 Standard, as well as different Methods and Tools for a step-by-step implementation of successful SCRM.

 

In the course of digitalization, risk identification can be simplified and made clearer for companies by digitally mapping the supply chain. In addition, AI-supported tools offer the possibility of automatically merging large volumes of data from external sources, making them clearly accessible to employees and updating them regularly. Especially in the case of complex global supply chains, which are to be mapped beyond tier 1 partners, this type of tool offers an enormous simplification of the process and has a strong positive influence on transparency and visibility.
For more information on which digital tools can be used in which capacity to support SCRM, please refer to our overview of Methods and Tools as well as to the section of improving Visibility on the Supply Chain Resilience site.

There should also be a focus on strengthening resilience (SCRES) and explicitly building flexible capacity to limit or reduce the impact of unpredictable risk events. The goal of this is to safeguard potentially vulnerable points in the supply chain. Potential measures in this area include the qualification of personnel for various activities, the establishment of second-source suppliers with contractually defined flexible capacities, short-term contract terms, flexible capacities at logistics service providers, and the differentiation of supplier locations to limit the influence of local risks or crises. In addition, reducing the complexity of supply chain structures can be considered to increase the visibility of the company. Business continuity plans can be developed for specifically defined risk scenarios so that pre-planned measures can be initiated in the event of occurrence. A strategy that aims to build up redundancies can also be implemented, but this must be analyzed and assessed in detail beforehand in terms of its impact on the company's liquidity, particularly with regard to crisis situations. It should also be taken into account that strategies such as the classic increase in coverage through buffer stocks may be subject to a time limit in terms of their effect.
The SCRES processes and the development of business continuity plans as part of business continuity management are closely linked. Achieving a more resilient supply chain consists of four steps with respective tasks that include elements from business continuity management or collaboration. For more details on SCRES, BCM or Collaboration please refer to our detailed explanations on the respective topics.

If the previously described recommendations for action have been successfully implemented and consolidated in the company, an extension of SCRM to the cross-company level can be considered. However, it is necessary to first define the relationship with the respective partner, as companies should assess the type of cooperation with other companies based on the trust placed, the underlying dependency and possibly different business strategies. Companies can and should cooperate with different companies within their supply chain in different ways and with different intensity. Once the type and intensity of collaboration is determined, cross-company SCRM initiatives can be launched. In the simplest form, this can take place in the context of knowledge exchange, for example in the course of supplier development programs. The goal of this is to benefit from the different expertise in the partner companies in order to increase the profitability of the individual companies. A further step could be the implementation of a formal process of information exchange between the companies in order to improve the information base and thus also the basis for the companies' decision-making. The final step of collaborative SCRM also includes the joint development and implementation of risk treatment measures. The basis for all forms of collaborative SCRM is the general cooperation and mutual trust of the partners.
To sucessfully implement Supply Chain Wide Collaboration, different Types of Collaboration as well as the closely interlinked Supply Chain Risiko Governance are to be repected.

The basis of all action in such situations is a solid information situation across all departments of the company, as crises can have a wide range of effects on different areas of the company. For example, supply chains and thus supply can be threatened, but at the same time demand can also fluctuate extremely. The effects of the crisis as well as the implemented measures should therefore always be considered with regard to the entire company. In addition, crises can bring about rapid changes in situations and thus also in the requirements for SCRM, so that it may be necessary to shorten the update cycle in order to create risk transparency. In the best case, companies act on the basis of daily updated data, which underlines the advantages of digital tools. Due to the threat to the company's existence associated with the crisis, an assessment of the measures to be implemented in terms of their impact on the company's liquidity is imperative. In addition to rapid decision-making, in the context of crises, the identification of specific crisis impacts and the implementation of specific measures can also influence the speed of the crisis progression for the company. In the course of this, business continuity plans with pre-planned measures can bring about a higher speed. In addition to measures to mitigate the crises, strategies and measures to restore full performance should also be developed at the same time as part of ramp-up plans. These are used to plan the resumption of regular business activities after the crisis has been overcome.