5 key trends which are becoming the ‘new normal’ for the procurement sector as we continue to navigate Covid-19

  • Published on: 4 August 2020
  • By: Anonymous

As with most sectors, Procurement has been hit hard over the past few months as its experts try to navigate the ‘new normal’ imposed by Covid-19. Disrupted supply chains, complex logistics issues, new border controls, more competition for less bid opportunities and revised working practices are just some of the many challenges faced by procurement teams and consultants.

But it’s not all doom and gloom, as constantly reported in the media – far from it in fact – as we are hearing a lot of positive stories of procurement being the hero, as organisations try to navigate these challenges. So, let’s take a look at some of the trends we have witnessed in recent weeks:

  1. Increased collaboration in Supply Chains – By far the most striking trend we have witnessed is the increase in collaboration between suppliers and their clients. Instead of panicking and seeking alternative options to meet the changing demands of their supply chains, we are seeing clients work with their existing supply chains to renegotiate mutually beneficial win-win agreements, to seek alternative solutions to new problems and to meet changes in demand. This has meant better communication and better supplier relationship management on the part of the client – which can only lead to a stronger long-term relationship.
  2. Shape shifting to meet demand – We have seen some amazing examples of adaptability amongst suppliers in the past few months – from car manufacturers building ventilators, to educational bodies building face guards, fashion brands sewing scrubs and high street brands creating new lines in face covings. With this has come some truly altruistic behaviour from larger brands; such as handing out hand santitisers to local businesses and residents or food parcels for NHS workers. This only goes to prove how adaptive suppliers can be when presented with a desired outcome as opposed to a perceived problem.
  3. Leveraging digital to increase transparency – It seems almost every day we are hearing of a new tool on the market which will help to increase transparency in supply chains and give organisations more control over their procurement processes. So why such a surge? Well, it seems that it’s taken a pandemic which has shaken supply chains to their very core for businesses to truly understand that they need to have tight control over their supply chains in order to predict and mitigate any risk which may be coming further down the line. Over time, this tighter control will also undoubtedly result in cost savings, as well as leading to an increased understanding that supplier consolidation, or renegotiation through better communication, can have a considerable impact on their bottom lines.
  4. Embracing more flexible resources – We are seeing increased demand for flexible resources, such as consultants and interims. It may be that organisations are recognizing a skills gap as they try to plan out their recovery to business as usual, or perhaps they are embarking on a period of transformation where they need extra resource to manage a new project. Whatever their motivations for needing flexible resource, their experiences of enforced home working practices are resulting in a shift in attitude.
    Whereas previously a head of procurement might limit their search for a contractor to within an x mile radius of their place of business, they are now pushing ‘location’ lower down their list of priorities. This is great news for businesses like ours who leverage sector and industry experts across the UK. It means that we are now able to offer the most experienced consultants to deliver the solution to a very specific project need – regardless of location. All hail the ‘work from anywhere’ revolution.
  5. Giving Procurement a bigger seat at the table – There is no doubt that the role of CPO has never been more important. It’s a little sad that it seems to have taken a global pandemic to make some c-suite members realise the importance of the role of senior procurement to increase business efficiency and reduce cost but hey, it’s here now so let’s embrace it.
    We are hearing some truly remarkable stories of how procurement teams have sourced alternative suppliers when supply chains are worst hit, where they have worked with suppliers to adapt their offer to meet demands or where they have renegotiated terms to maintain good relationships.

We asked eXceeding’s MD, Steve Rowland, what he hoped the industry could learn from Covid-19
“That’s easy: That better collaboration is the way to a healthier supply chain through:

  • Embracing digital tools to increase transparency
  • Working with your suppliers to share responsibility
  • Taking advantage of flexible resources to plug a skills gap.

All of these possible collaborations can go a long way to increasing efficiency, improving relationships and mitigating risk, as well as saving considerable costs.”

So our hope is that we see a shift in the primary focus from; driving suppliers to deliver the lowest cost, to collaborating and sharing risk to increase transparency and efficiency throughout supply chains.

What other changes have you witnessed as a result of Covid-19 in the procurement sector? Do you think organisations’ attitudes will change post-pandemic?

If you’d like to hear more about our approach to Procurement Strategy, please click here