Procurement and supply chain leaders are experiencing newfound appreciation and opportunity following their response to COVID-19.
COVID-19 hit supply networks hard. So hard, in fact, that 97% of organisations experienced a related disruption. Still, there’s more to the story than disruption and chaos.
Insights shared by over 600 procurement and supply chain professionals actually paints a positive and inspiring picture: supply chain and procurement leaders were prepared – and responded brilliantly – when faced with a global pandemic that literally brought the whole world to a sudden halt. Now they have an opportunity to reset the procurement agenda.
A Look Beneath the Surface
Consider the data beyond headlines. While nearly every organisation was impacted, only 17% said the supply chain disruption was severe. On the other hand, almost half agreed the impact was minimal or moderate.
Similarly, despite the macro economic turmoil, the impact on supplier payments has been relatively modest. Most contracts and supplier relationships survived the chaos, showing the strength of existing relationships and strategies. According to our research:
- 58% of organisations are still operating and paying their suppliers per contract,
- 14% are speeding up payments to suppliers,
- 6% are providing direct financial support.
When the pandemic affected supply chains directly, procurement responded quickly and effectively. The majority of organisations (65%) were forced to source alternative suppliers for affected categories. As of early June, 79% of those surveyed had already found alternative suppliers for affected categories, with 53% locking down new suppliers in less than three weeks. Amazingly, 18% were able to find new suppliers in only a weeks’ time. This response has not gone unnoticed.
The Spotlight Shines Bright
The agility shown by procurement and supply chain leaders, along with their ongoing criticality in managing the crisis, has been a boon for the function with executives and board members.
“The crisis has put procurement in the spotlight,” commented Ian Thompson, Regional Director, UK and Nordics at Ivalua, a source-to-pay technology provider. “There are a lot of talented executives now getting the attention of the c-suite for the first time.”
When we asked how leadership leveraged procurement and supply chains teams during the crisis, only 16% of survey respondents said they were still being viewed tactically. On the other hand, 40% said their recommendations are solicited more than usual and 22% said they now have a seat at the executive table with input on key decisions.
“For as long as I remember, the question has always been how do we make the C in CPO a real part of the c-suite?” said Thompson. “It’s finally happening, and procurement needs to capitalise.”
According to Thompson, the key is taking advantage of the new platform. “Now that you have the attention of the c-suite, you need to have an agenda, and use the platform to properly set the record straight for what procurement is all about, and what’s possible. When called upon, you can fix the problem, or, you can fix the problem and reframe the conversation internally.”
The heightened attention has also led to renewed interest in procurement and supply chain careers. As a result of the crisis, nearly 62% of all respondents and 71% of millennials said their interest in procurement and supply chain has increased.
“The interest is very high. Procurement has become an essential function during the crisis, especially on the direct side. We have procurement teams that are fueling the food supply chain, sanitising the country and ensuring the flow of essential services across the globe. More people are recognising the importance of procurement and supply chain,” said Thompson.
The current dynamic should lead to fresh career opportunities for Generation Next. The function’s performance during the crisis sets the stage for increased investments in talent development and technology, a bigger seat at the executive table, and new opportunities for ambitious practitioners to make their mark.