Procurement: Adapting to the COVID-19 Pandemic

There is no escaping it. Everywhere you look, everything you read, everyone you speak to, in fact, every part of every day is currently affected by the Coronavirus. For many of us, the impacts of the global Pandemic will likely be worse than the disease itself.

The supply chains of many modern businesses run on a global scale, with providers of raw materials, parts and products in every corner of the globe. Thanks to the increasing popularity of online shopping, customers are often based in different countries to those we operate in.

The way we do business, on a global scale, has been suddenly turned on its head. Countries have all but closed their borders, flights are grounded, and shipping vessels are stuck in port, in a bid to quell the infection from further spreading amongst their populations.

Home-grown products are once again becoming highly desirable, and industries like the agricultural sector are busier than ever as demand for their produce and product is through the roof. Undoubtedly this is some much needed good news during this period of uncertainty.

For companies with international supply chains, there is much work that needs to be done, and quickly, to source new, more local, suppliers. Much of the responsibility for finding and onboarding new providers will lie with the Procurement department. Supply Chains can not be established overnight. Time is needed to review the capabilities of a new supplier, with factors like quality, capabilities, costs, turnaround times and logistics a vitally important part of the selection process.

In the words of the UK Chancellor, Rishi Sunak “These are unprecedented times; we are dealing with a situation, the likes of which has never been seen before” (14th April 2020).

The likelihood is that during the Pandemic, it is not feasible to carry out extensive checks as you would at regular times. Businesses are facing choices such as sacrificing service levels, accepting lower quality parts and products, paying higher costs per item, or halting production until such a time they can resume work with their regular suppliers.

In the latest issue of Supply Chain Outlook from IoSCM, we hear from three experienced Procurement Professionals about the impact COVID-19 is having on not only the Procurement industry but also the wider supply chain, and they share their insights into what the rest of 2020, and beyond, may have instore.

The first of our Expert panel is John Little, Head Procurement Tutor for The Network 360 Group. John has an extensive background in strategic Procurement, and now uses his knowledge of the industry to support learners at all stages of their professional development.

Relaxing the restrictions; Its time to shop local!

The COVID- 19 pandemic, along with Brexit, should release the “shackles” from the public sector to procure strategic items from the UK without going along with the EU procurement rules on tendering. Only with government guidance, of course; otherwise, I feel there is a risk public procurement teams will fall back into their old familiar ways. Within the private sector, I foresee a big push for “in-country” Procurement over the next 1-3 years. Once things settle down,  there will be greater emphasis on cost savings, so outsourcing to other nations will again become the norm. Private industry will once again (in my opinion) move away from single-source suppliers to multiple suppliers with at least a 30% sourced within their our country for safety measures. I also see an increase, in the shorter term, in inventory levels within businesses, just in case the virus sparks up again. Overseas travel for business purposes will suffer a major blow as e-communicating will eliminate all but essential meetings/visits. The lockdown has shown us how this way of working can be effective, reduce costs and provide more sustainable ways to do business.

Small to medium enterprises within the UK could make a considerable contribution if they price their products accordingly. They will need to offer the buyer something different with locally sourced materials and labour, holding safety stock, reduced lead times and being able to manage their production with quick and efficient changeovers to suit customer demand.

All in all, the restrictions put in place to overcome the Pandemic could be an excellent opportunity for certain types of organisations, especially those in the health business.  Both manufacturers and distributors are likely to receive additional contracts in the coming months, as I expect governments will demand that there are never again failures in PPE provision. In recent times we have seen country to country struggling with health professionals dying needlessly due to lack of protection. A lesson will be learned by those responsible, and rightly so.

If you would like to find out more about our range of Procurement Qualifications or have any questions about which course would aid you with achieving your individual development aims speak with one of our Experts today.