March 26, 2020 9 a.m. PST Hosts: Deborah Stanton, Executive - - PowerPoint PPT Presentation

March 26, 2020 9 a.m. PST

Hosts: Deborah Stanton, Executive Director Nicole Leonardi, Director of Corporate Accounts

Material based on the CAPS Research CPO Insights Survey conducted March 12-19, 2020

CPO’S RESPONDING TO THE CORONAVIRUS PANDEMIC

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Manufacturing 45% Process 34% Services 22% CPO Respondents by Sector

• 74 CPO’s from major companies
• Revenues: ~$1.8 trillion
• 84% HQ in the US
• 16% HQ outside of the US
• Responses collected: March 12 – 19, 2020

CPO’S RESPONDING TO THE CORONAVIRUS PANDEMIC

NATURE OF ACTIVITY YOUR COMPANY IS TAKING IN RESPONSE TO COVID-19

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0% 3% 97% Not doing any planning or taking action Only taking action in specific "hot zones" High level of action underway across the enterprise

% of Companies

CPO’S RESPONDING TO THE CORONAVIRUS PANDEMIC

IMPACT OF US- IMPOSED CHINA AND EUROPE TRAVEL BAN

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5% 11% 19% 32% 37% 49% 14% 5% 27% 22% 44% 33% Does not apply - we do not have operations, suppliers, or employees in affected countries Minimal impact No impact to operations, suppliers, or employees in affected countries Anticipated loss of revenue Significant disruption to supplier interactions Significant disruption to employee internal interactions China Travel Ban Europe Travel Ban

Percent of companies. Multiple options could be selected.

IMPACT OF US-IMPOSED CHINA AND EUROPE TRAVEL BANS

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Employee Interaction Supplier Interaction Europe 49% 37% China 33% 44% 33% 44% 49% 37% China Europe 5% 11% 19% 32% 37% 49% 14% 5% 27% 22% 44% 33% Does not apply - we do not have operations, suppliers, or… Minimal impact No impact to operations, suppliers, or employees in affected countries Anticipated loss of revenue Significant disruption to supplier interactions Significant disruption to employee internal interactions

China Travel Ban Europe Travel Ban

IMPACT OF US-IMPOSED CHINA AND EUROPE TRAVEL BANS

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5% 11% 19% 32% 37% 49% 14% 5% 27% 22% 44% 33%

Does not apply - we do not have operations, suppliers, or employees in affected countries Minimal impact No impact to operations, suppliers, or employees in affected countries Anticipated loss of revenue Significant disruption to supplier interactions Significant disruption to employee internal interactions

China Travel Ban Europe Travel Ban 0% 10% 20% 30% 40% 50% 60% 70%

Significant disruption to supplier interactions Significant disruption to employee internal interactions

China Travel Ban (by Sector)

Manuf Process Services

IMPACT OF US-IMPOSED CHINA AND EUROPE TRAVEL BANS

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0% 10% 20% 30% 40% 50% 60% 70% Manuf Process Services

China Ban

Does not apply Minimal Impact No Impact

5% 11% 19% 32% 37% 49% 14% 5% 27% 22% 44% 33% Does not apply - we do not have

• perations, suppliers, or

employees in affected countries Minimal impact No impact to operations, suppliers,

• r employees in affected countries

Anticipated loss of revenue Significant disruption to supplier interactions Significant disruption to employee internal interactions China Travel Ban Europe Travel Ban

CPO’S RESPONDING TO THE CORONAVIRUS PANDEMIC

ACTIONS YOUR COMPANY IS TAKING OR PLANNING ON TAKING

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12% 22% 26% 40% 42% 81% 89% 97% Furloughing / side-lining idle employees Slowing/holding expansion plans Pulling back on capital investments Restricting discretionary spending Changing forecast due to significant change in customer demand Requiring employees to work remotely Activation of emergency response teams Imposing travel restrictions

Percent of companies. Multiple options could be selected.

ACTIONS YOUR COMPANY IS PLANNING / TAKING

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12% 22% 26% 40% 42% 81% 89% 97%

Furloughing / side-lining idle employees Slowing/holding expansion plans Pulling back on capital investments Restricting discretionary spending Changing forecast due to significant change in customer demand Requiring employees to work remotely Activation of emergency response teams Imposing travel restrictions 100% 85% 85% 96% 96% 88% 94% 88% 63% Imposing travel restrictions Activation of emergency response team Requiring employees to work remotely

By Sector

Manufacturing Process Services

ACTIONS YOUR COMPANY IS PLANNING / TAKING

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12% 22% 26% 40% 42% 81% 89% 97%

Furloughing / side-lining idle employees Slowing/holding expansion plans Pulling back on capital investments Restricting discretionary spending Changing forecast due to significant change in customer demand Requiring employees to work remotely Activation of emergency response teams Imposing travel restrictions 52% 38% 31%

Taking Action to Change Forecasts (% of companies)

Manufacturing Process Services

ACTIONS YOUR COMPANY IS PLANNING / TAKING

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12% 22% 26% 40% 42% 81% 89% 97%

Furloughing / side-lining idle employees Slowing/holding expansion plans Pulling back on capital investments Restricting discretionary spending Changing forecast due to significant change in customer demand Requiring employees to work remotely Activation of emergency response teams Imposing travel restrictions

36% 15% 18% 42% 29% 25% 44% 44% 25% Restricting discretionary spending Pulling back on capital investments Slowing / holding expansion plans

Spending, Investments, and Expansion (% of Companies)

Manufacturing Process Services

ACTIONS YOUR COMPANY IS PLANNING / TAKING

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12% 22% 26% 40% 42% 81% 89% 97%

Furloughing / side-lining idle employees Slowing/holding expansion plans Pulling back on capital investments Restricting discretionary spending Changing forecast due to significant change in customer demand Requiring employees to work remotely Activation of emergency response teams Imposing travel restrictions 18% 8% 6%

Furloughing / Side-lining Employees

Manufacturing Process Services

ACTIONS YOUR COMPANY IS PLANNING / TAKING

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12% 22% 26% 40% 42% 81% 89% 97% Furloughing / side-lining idle employees Slowing/holding expansion plans Pulling back on capital investments Restricting discretionary spending Changing forecast due to significant change in customer demand Requiring employees to work remotely Activation of emergency response teams Imposing travel restrictions

• 1. Changing forecasts
• 2. Restricting

discretionary spend

• 3. Furloughing/side-

lining employees

• 4. Slowing/holding

expansion plans

• 5. Pulling back on

capital investments

• 1. Restricting

discretionary spend

• 2. Changing forecasts
• 3. Pulling back on

capital investments

• 4. Slowing/holding

expansion plans

• 5. Furloughing/side-

lining employees

• 1. Restricting

discretionary spend

• 2. Pulling back on

capital investments

• 3. Changing forecasts
• 4. Slowing/holding

expansion plans

• 5. Furloughing/side-

lining employees

MANUFACTURING PROCESS SERVICES

CPO’S RESPONDING TO THE CORONAVIRUS PANDEMIC

THE GREATEST CHALLENGE FOR YOUR SUPPLY MANAGEMENT GROUP

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0% 1% 4% 12% 20% 20% 31% Inflated prices (i.e. price gouging) Decreased source of supply from outside “hot zones” Receiving inaccurate / inadequate information from suppliers Shortage of logistics carriers Decreased source of supply from “hot zones” Increased lead time Increased demand for health and safety items

Percent of companies. Select one..

THE GREATEST CHALLENGE FOR YOUR SM GROUP

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0% 1% 4% 12% 20% 20% 31%

Inflated prices (i.e. price gouging) Decreased source of supply from outside “hot zones” Receiving inaccurate / inadequate information from suppliers Shortage of logistics carriers Decreased source of supply from “hot zones” Increased lead time Increased demand for health and safety items 0% 10% 20% 30% 40% 50% 60% Increased demand for health and safety items Increased lead time Decreased source of supply from “hot zones” Receiving inaccurate / inadequate information from suppliers Shortage of logistics carriers Decreased source of supply from

• utside “hot

zones” Inflated prices (i.e., price gouging)

Greatest Challenge

Manufacturing Process Services

CPO’S RESPONDING TO THE CORONAVIRUS PANDEMIC

ACTIONS YOUR SUPPLY MANAGEMENT GROUP IS TAKING OR PLANNING ON TAKING

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1% 19% 24% 50% 63% 67% 68% 75% 97%

Buying insurance to cover disruptions Renegotiating supplier contracts due to change in volume Improving demand planning, S&OP integration Increasing material inventory High-level of sourcing for health and safety items Responding to increased challenges in logistics Shifting to alternate sources Assessing sub-tiers in the supply chain to identify vulnerabilities Creating contingency / mitigation plans

Percent of companies. Multiple options could be selected.

ACTIONS YOUR SM GROUP IS PLANNING / TAKING

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1% 19% 24% 50% 63% 67% 68% 75% 97% Buying insurance to cover disruptions Renegotiating supplier contracts due to change in volume Improving demand planning, S&OP integration Increasing material inventory High-level of sourcing for health and safety items Responding to increased challenges in logistics Shifting to alternate sources Assessing sub-tiers in the supply chain to identify vulnerabilities Creating contingency / mitigation plans

82% 82% 76% 64% 55% 27% 15% 0%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Assessing sub- tier suppliers Responding to challenges in logistics Shifting to alternate sources High-level of sourcing for health and safety items Increasing material inventory Improving demand planning, S&OP integration Renegotiating supplier contracts Buying insurance to cover disruptions

Manufacturing

Manufacturing

(% of companies, multiple options could be selected)

ACTIONS YOUR SM GROUP IS PLANNING / TAKING

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1% 19% 24% 50% 63% 67% 68% 75% 97% Buying insurance to cover disruptions Renegotiating supplier contracts due to change in volume Improving demand planning, S&OP integration Increasing material inventory High-level of sourcing for health and safety items Responding to increased challenges in logistics Shifting to alternate sources Assessing sub-tiers in the supply chain to identify vulnerabilities Creating contingency / mitigation plans

71% 71% 63% 63% 46% 17% 13% 4%

0% 10% 20% 30% 40% 50% 60% 70% 80%

Assessing sub- tier suppliers Responding to challenges in logistics Shifting to alternate sources High-level of sourcing for health and safety items Increasing material inventory Renegotiating supplier contracts Improving demand planning, S&OP integration Buying insurance to cover disruptions

Process

Process (% of companies, multiple options could be selected)

ACTIONS YOUR SM GROUP IS PLANNING / TAKING

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1% 19% 24% 50% 63% 67% 68% 75% 97% Buying insurance to cover disruptions Renegotiating supplier contracts due to change in volume Improving demand planning, S&OP integration Increasing material inventory High-level of sourcing for health and safety items Responding to increased challenges in logistics Shifting to alternate sources Assessing sub-tiers in the supply chain to identify vulnerabilities Creating contingency / mitigation plans

67% 60% 60% 47% 33% 33% 27% 0%

0% 10% 20% 30% 40% 50% 60% 70%

Assessing sub- tier suppliers Shifting to alternate sources High-level of sourcing for health and safety items Increasing material inventory Improving demand planning, S&OP integration Renegotiating supplier contracts Responding to challenges in logistics Buying insurance to cover disruptions

Services

Services (% of companies, multiple options could be selected)

ACTIONS YOUR SM GROUP IS PLANNING / TAKING

www.CAPSResearch.org

1% 19% 24% 50% 63% 67% 68% 75% 97% Buying insurance to cover disruptions Renegotiating supplier contracts due to change in volume Improving demand planning, S&OP integration Increasing material inventory High-level of sourcing for health and safety items Responding to increased challenges in logistics Shifting to alternate sources Assessing sub-tiers in the supply chain to identify vulnerabilities Creating contingency / mitigation plans

82% 76% 82% 64% 55% 27% 15% 0% 71% 63% 71% 63% 46% 13% 17% 4% 67% 60% 27% 60% 47% 33% 33% 0%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Assessing sub- tier suppliers Shifting to alternate sources Responding to challenges in logistics High-level of sourcing for health and safety items Increasing material inventory Improving demand planning, S&OP integration Renegotiating supplier contracts Buying insurance to cover disruptions

ACTION by SM

Manufacturing Process Services

(% of companies, multiple options could be selected)

ACTIONS YOUR SM GROUP IS PLANNING / TAKING

www.CAPSResearch.org

1% 19% 24% 50% 63% 67% 68% 75% 97% Buying insurance to cover disruptions Renegotiating supplier contracts due to change in volume Improving demand planning, S&OP integration Increasing material inventory High-level of sourcing for health and safety items Responding to increased challenges in logistics Shifting to alternate sources Assessing sub-tiers in the supply chain to identify vulnerabilities Creating contingency / mitigation plans

1. Letters/communications to suppliers

• Refraining from visiting company sites
• Mission critical suppliers as recognized by the Department of Homeland Security ESSENTIAL CRITICAL

INFRASTRUCTURE WORKERS to maintain normal work schedules

• Addressing payment terms and restructuring of milestone payments
• No change in supplier payments – accounts payables operating per standards

2. Ensuring supplier business continuity plans are activated 3. Vetting new suppliers 4. Working cash flow plans – both internally and with suppliers (SCF) 5. Assessing agreements and supplier relationships to improve “customer of choice” status 6. Getting ahead of Force Majeure notifications – 44% increase of companies declaring (RiskMethods) 7. Planning for reduced revenue

• Review of open requisitions – cancel?
• Review of existing commitments – terminated, reduced, postponed?

8. Reprioritizing and de-expediting non-essential orders 9. Negotiating deposit refunds

• 10. Tracking refunds and travel credits
• 11. Managing outsourced/contracted support services, including financial assistance
• 12. Creating split shifts and work hour rotations
• 13. Addressing needs/suppliers for employees working remotely
• 14. Encouraging community service/outreach (virtually)

ACTIONS YOUR SM GROUP IS PLANNING / TAKING

Poll: Are experiencing significant increase of requests for donations or assistance? Additional Input from the audience: How are CPO’s and their teams managing the influx of requests from their communities for donations and assistance in finding supplies?

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Chat Type your response in the chat box.

THANK YOU

All slides and a recording of today’s webinar will be available, go to: www.capsresearch.org/coronavirus/ Have additional questions? Email us: metrics@capsresearch.org Want more information on membership? Email us: metrics@capsresearch.org

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