As challenges go, the COVID-19 pandemic has to be up there as one of the most disruptive forces seen by procurement managers to date. Whilst digital transformation has been a buzzword on the lips of many a senior executive, the sudden switch from on-site to remote work has made it starkly clear that most companies have no backup plans for supply chain management or tendering processes. As a result, several weeks, if not months, of chaos ensued, as teams struggled to be coordinated and reactive, with access to more limited information than usual.
The disparity between those who’d embraced agile and flexible software and those still stuck in manual processes was felt. The former had higher visibility across their supply chain and could easily conjure up the information they needed in a matter of minutes to reduce risk fast. The latter relied too heavily on fallible human intelligence and existing relationships with a few top-tier suppliers for their information.
As the threat of coronavirus gives the impression of easing in select countries (the key expression being “gives the impression” of course), Chief Procurement Managers may well be sighing in relief and looking forward to a return to “business as normal”.
I have bad news for you.
That normal no longer exists.
Having experienced the chaos of this pandemic, it would be extremely foolish for any company to simply pretend it was a blip and go back to old practices. Instead, as offices begin to re-open across the world, they have an opportunity to take stock and learn from the experience.
It seems that many business leaders agree. A YouGov survey found that 60% of UK businesses surveyed said there would be an increase in working from home compared to before lockdown (the results are as high as 93% in some sectors). Meanwhile, 48% of those surveyed declared that they will be making greater use of online systems and software.
Here are three areas that procurement managers should seriously consider when preparing for the new normal.60% of UK businesses surveyed said there would be an increase in working from home compared to before lockdown #wfh #supplychain Click To Tweet
Perhaps the biggest takeaway from the last few months, is that companies need to embrace the cloud to make remote working easier. From complex remote desktop access issues, to inadequate technology at home, to information being dispersed in various offline locations, there have been many obstacles preventing teams from working as well as they could.
Making a plan for working effectively remotely has to be a priority for all businesses. This doesn’t just mean ensuring that everyone has a decent set up at home, but also spending resources on more advanced and integrated information systems.
“What’s the metric of success? I think for quite some time, organisations have felt that savings were the only yardstick to measure success, and organisations are now looking at supply chain resilience and agility as being more important.”
– Tom Graham, Executive Search Consultant, in The Art of Procurement podcast
Get to know your tier suppliers
Another source of chaos during the pandemic, namely shortages, can be ascribed to poor visibility down the supply chain. According to KYU’s Barometer of Supply Chain Risks, a shocking 65% of firms cannot map their supply chain, and 55% do not know where their suppliers are geographically based. This costs companies, on average, 3 million euros a year. After all, you often just need one weak link to cause a ripple effect of inefficiency across the chain.
Will Covid-19 finally be the wake-up call needed to stop haemorrhaging money?
The complexity of today’s supply chains doesn’t make this mapping an easy task, with hundreds, if not thousands, of suppliers involved. Yet it is a highly necessary one to mitigate future risk.
Automotive and aeronautical industries appear to be ahead of the curve compared to other industries when it comes to assessing risk, with 90% of companies surveyed by KYU having performed a risk evaluation. Other industries, such as Telecoms, only conducted such an evaluation in 40% of cases. I would bet a round of drinks that these 2019 figures will have shifted considerably this year.
What does such an assessment entail?
- Identifying correctly where the suppliers are situated geographically, as well as their activities
- Estimating their potential impact on the supply chain should their services be interrupted (through a Business Impact Analysis -BIA).
Keep your friends close and your stakeholders closer
Finally, the third major axe companies should seriously consider to mitigate future risk, is greater collaboration between stakeholders. This means putting an end to silos within the company’s different teams, but also collaborating with clients, suppliers, and local and national actors. In other words, companies should consider how they are integrated within an ecosystem and take advantage of this where they can.
Why? because creating this environment of mutual support, information exchange, and influence, will make companies more pro-active and resilient in the face of future catastrophes.
So, which will it be?
Will you be taking a gamble with your company’s future and going back to ‘normal’? Or will you be taking the lessons of the last few months seriously?
As someone who loves a success story, I hope it’ll be the latter.
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