COVID
COVID
(an 11% increase). Supplier management can support these by supplier managers regularly
management programme complete with guidance and toolkits for supplier managers. It will be interesting to see over the next couple of years if these identified needs and gaps result in training being provided to supplier management professionals.
Has the pandemic affected your organisation’s focus/attention on supplier management?
SUMMARY
conducting supply chain mapping, risk identification, mitigation planning and vendor relationship activities to ensure supply chain continuity. These activities should become part of a supplier manager’s business as usual activities and part of a structured supplier management programme. Leaders and Fast Followers. Whilst for both it sat around the mid-level, both saw 20% increases (to 37% and 35% respectively). Conversely, collaboration and team working were cited by 10% fewer respondents this year – potentially because these had been addressed last year. Another dramatic increase was governance and oversight among Supplier management aspects in need of improvement When asked to identify what aspects of supplier management needed to be improved for better management of Covid-19 impacts, the responses were relatively consistent across 2020 and 2021. The top two areas in need of development are consistent across all three maturity levels, with supply chain risk management taking the top ranking, and communication and information sharing taking second place. Comparing this year’s findings to last year, communication and information sharing as well as relationship management experienced the biggest increases (13% and 11% respectively). A key finding of our research is that the top three areas that proved most beneficial to dealing with Covid-19 were also the same areas that respondents stated needed the most improvement. In other words relationships, communication and risk management. The finding indicates that the pandemic has elevated the areas in importance, increasing visibility among respondents, and alerted them to potential skill gaps to address these areas. Ways of addressing these gaps are supplier management training, shadowing of experienced colleagues and the development of a structured supplier
It has greatly increased the focus
36%
Last year we wrote that “nobody could have predicted how Covid-19 was going to overshadow the whole of 2020 and beyond”. A year on, although the world has been in and out of lockdowns, varying region by region and has seen the development, distribution, and deployment of vaccines, the narrative remains the same. This year’s responses to questions linked to the pandemic provided two particularly interesting narratives. Firstly, those who responded to our research said the pandemic has helped to raise awareness of the importance of effective supplier management in their organisations. Whilst not unexpected, given the impact the pandemic has had on supply chains around the world, it will be interesting to see if this increased awareness of supplier management continues, and how it translates into the six pillars. Secondly, despite last year’s research being conducted relatively close to the start of the pandemic – and even though a lot of changes have happened since (both within business but also in treating Covid-19) – overall responses haven’t changed dramatically. Proposed business priorities after the pandemic are in the exact same order across all maturity levels. Furthermore, responses concerning which aspects of supplier management are beneficial, as well as those needing improvement, remain largely unchanged, except for some minor ranking differences.
It has slightly increased the focus
34%
Supply-side priorities in Covid-19 recovery
It has not impacted the focus
18%
Another fascinating finding of our research was the ranking of supply-side priorities when recovering from the Covid-19-led situation. These were listed in the same order as last year. So, the view in the market (in total and equally at every level of maturity) was the same more than a year into the pandemic as it was at the start of it, when there were many more unknowns. Reviewing and upgrading supply chain risk management remains the most cited priority. Organisations are keen to build a better risk management procedure to gain greater visibility of similar situations as they arise, enabling them to be better prepared. Contingency planning to identify alternative suppliers remained in second place, with boosting collaboration with suppliers in third position. One interesting conclusion to draw from this result is that it was deemed more important to identify alternative suppliers who could step in if needed, than help future-proof the existing supply base. Across this topic, we did see some large shifts in responses. Among Leaders, boosting supplier collaboration was stated 15% more than last year, whilst cost reduction and carrying out supplier financial checks both dropped by 11%- 13% across Leaders and Fast Followers. However, these changes did not ultimately affect the overall rankings. In times of emergency, a collegiate approach is an automatic reaction within strategic relationships through a sense of “we’re all in this together”. This tends to push aside the notion of slashing costs to more strategic conversations about how vendors and supplier managers can work together to achieve mutually beneficial results and mitigate impending supply chain risks.
It has slightly decreased the focus
7%
It has greatly decreased the focus
4%
Don't know
3%
Total responses on what aspects of supplier management were beneficial in mitigating the Covid-19-led situation (2020 vs 2021 comparison)
2020
2021
Relationship management
57%
65%
Communication and information sharing
70 %
Beneficial supplier management aspects to help mitigate Covid-19
Increased focus on supplier management as a result of the pandemic An overwhelming 70% of respondents indicated that the pandemic has increased their organisation’s focus on supplier management. This is a positive result coming out of a challenging period. More than half of the 70% who had seen a rise reported that the pandemic had “significantly increased” their organisation’s attention on supplier management. This response is consistent across all maturity levels; however, Leaders and Fast Followers have seen the biggest leaps. Heightened awareness of supplier management provides a great opportunity for organisations. They can capitalise on this increased interest by using it as an opportunity to look to the six supplier management pillars set out by State of Flux and further develop their supplier management programmes.
63%
58%
As with last year, we asked 2021 respondents what aspects of their supplier management approach proved the most beneficial in mitigating the disruption created by Covid-19. Among the total responses, the top two remained consistent but flipped positions. This year, relationship management was the top response (with 65%, up from 57% last year), while communication and information sharing dropped to second place (down to 58% from 63% in 2020). Indeed, this year, relationship management was rated top across all levels of maturity, the only change among the different groups was that Leaders ranked supply chain risk management in second place. The largest increases in importance were with supply chain risk management (13% higher than last year) and performance management
OFRESPONDENTSREPORTED THATTHEPANDEMICHAS INCREASEDTHEFOCUSOF THEIRORGANISATIONON SUPPLIERMANAGEMENT
Supply chain risk management
36%
49%
Collaboration and team working
50%
65 %
40%
Performance management
SAIDRELATIONSHIP MANAGEMENTWASTHE
10%
21%
MOSTEFFECTIVEELEMENT OFSUPPLIERMANAGEMENT INMITIGATINGTHESITUATION CAUSEDBYCOVID-19
Governance and oversight
15%
21%
30 %
People skills and competence
18%
14%
INDICATEDCOSTREDUCTION WOULDBEASUPPLY-SIDE PRIORITY INTHERECOVERY FROMTHEPANDEMIC
Innovation
5% 5%
9 6
9 7
STATE OF FLUX
2021 GLOBAL SRM RESEARCH REPORT
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