COVID
COVID
Feedback revealed the importance of positive behaviours and collaboration during a crisis. Just over 63% reported that communication and information sharing worked well, nearly 57% spoke about relationships and 50% were happy with their team working and collaboration. There then follows something of a gap. Supply chain risk management was reported as having proved effective by only 36% and supplier management technology was seen as a strength by just 1% of respondents. When we reversed the question and asked which three aspects of supply chain management were most problematic, the answers revealed that for many it was process and technology that were found wanting. Predictably it was supply chain risk management that was most singled out, by 47% of respondents. This corresponds with our general findings over several years - that risk management is not sufficiently embedded to safeguard supply chains and organisations when things go wrong. Technology was also revealed as a serious weakness. At a time when information sharing and accurate data were key, the lack of fit-for- purpose technology was clear, as is indicated by more than a third. Instead of being able to call on one system to access all the information they needed, the vast majority had to rely on fragmented systems with limited data and functionality, combined with manual effort to access what they
that they were significantly impacted with widespread supply shortages and a major impact on business continuity. North America and Australasia were less affected, with around 11% of companies impacted to the same degree. It was evident very early on that industry sectors would be impacted in different ways and this is confirmed by our findings. While the companies in all sectors report being affected to some extent, those most dependent on physical supply chains for goods and services were the worst hit. Comparing sectors from which we received the most responses, it was Consumer Goods and Manufacturing/ Automotive that reported the biggest hit with 17% and 12% respectively suffering widespread supply shortages and a major impact on business continuity. While non-essential manufacturing shut down quite rapidly, consumer goods tackled the dual problems of supply issues combined with a big switch to online sales. As you might expect, it was Financial Services that reported the least impact with 29% registering no impact at all.
Where in the supply did the most problem occur? (all respondents)
Further down the supply chain
During the period our survey was open, April-June, Europe appears to have been impacted most with more than 16% of companies reporting that they were significantly hit with widespread supply shortages and a major impact on business continuity. All industry sectors report being affected to some extent, but it was clear that those most dependent on physical supply chains for goods and services were the worst hit. More than half of companies report their supply chain problems emanated from further down the line than their first tier suppliers. Just over 63% reported that communication and information sharing worked well, but it’s clear this wasn’t particularly helped by technology as it was seen as a strength by just 1%, with only one in five procurement and supply chain teams having access via a single system to the information they needed. Around 72% of companies’ expectations were met in terms of being treated as a customer of choice by those suppliers where they thought they should be. Just over half of companies believe that SRM will be more of a board priority following Covid and 50% say it will result in a re-evaluation of their SRM programme. Of these, 84% think it will mean an acceleration or expansion of the programme. Summary
53%
Logistics and distribution
48%
First tier suppliers
36%
Other
10%
Aspects of supplier management that have proved most effective and beneficial in mitigating the situation created by Covid-19 (all respondents)
Communication and information sharing
63%
O ur timetable for preparing this annual research starts in February with a review of our questions and a decision regarding the theme for it. By the end of February we had settled on ‘Speed’ as our focus. However, by then coronavirus had already been declared a pandemic and was shutting down large parts of Asia and Europe. At that time nobody could have predicted how Covid-19 was going to overshadow the whole of 2020 and beyond. We realised that failing to include questions about Covid-19’s impact on procurement and supply chain management would be strange and a missed opportunity to learn and share experiences that could benefit companies in future. As the situation developed the time to launch our questionnaire approached. We created a series of questions that examined those experiences and analyse them here.
Where in the supply chain?
1% OFRESPONDENTS
Relationship management
Regional and industry sector impact
The risk of supply chains that extend beyond the first tier (that’s almost all of them) becomes evident when we look at where companies report that the most problems occurred. More than half said problems happened further down the supply chain than their first tier supplier and just less than half said it was in the logistics and distribution part of the supply chain. This compares with just 36% who said that most of their problems emanated from first tier suppliers.
56%
The progress of coronavirus infections across the globe on a country-by-country basis has been well documented - where it differs is when the impact of supply chain disruption is examined. Our survey was live from mid-April to the end of June and the responses in terms of regional impact reflect that period. At that point Europe appears to have been feeling the effect most with more than 16% of companies reporting
Collaboration and team working
THOUGHTTHEIRSUPPLIER MANAGEMENTTECHNOLOGY WASADEQUATEDURING THECRISIS 16% OFEUROPEANCOMPANIES REPORTEDSUPPLYCHAINS
50%
Supply chain risk management
36%
People skills and competence
Snapshot analysis
18%
Governance and oversight
This year, as in previous years, our research reveals that effective risk management is not sufficiently embedded in supplier management. The result shown here – “over half of companies report that problems occurred further down the supply chain than their first tier supplier” – reveals an important aspect of supply chain risk management that many businesses continue to overlook.
14%
What worked well…and what didn’t?
Performance management
BEINGSIGNIFICANTLY IMPACTEDBYCOVID 19 84% BELIEVETHEIRSRM PROGRAMMEWILLBE ACCELERATEDAND POSSIBLYEXPANDED
10%
If gaps in an organisation’s supply chain management process were going to be revealed this is when it would have happened. At the time of responding to our survey many companies were still in crisis mode and we understand it might not yet have been the time for quiet reflection. However, we appreciate the time people took to make an assessment.
Innovation
Over half of companies report that problems occurred further down the supply chain than their first tier supplier.
5%
Other
3%
Supplier management technology
1%
88 STATE OF FLUX
2020 GLOBAL SRM RESEARCH REPORT
89
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