COVID
COVID
Aspects of supplier management that proved most in need of improvement as result of the impact of Covid-19 (all companies)
required to make decisions. Only one in five procurement and supply chain teams had access via a single system to the information they needed to manage issues effectively. The crisis also uncovered deficiencies in supplier performance management. Again, this serves to illustrate the data we have shared previously. Too few companies have effective processes in place.
a small percentage may have said no because it’s already a priority, the majority will be reflecting the ongoing challenge that SRM has to gain traction at the senior stakeholder level. One way of addressing this might be to use the current situation and experiences to re-evaluate your approach to SRM. We asked just that question and received the reply that more than half would be shaking up their approach to SRM. We also asked respondents to speculate on the outcome of such a re-evaluation and here the response was over- whelming: 84% believed it would lead to the programme being accelerated and possibly expanded.
opinion State of Flux If the global economy is to recover and move forward, procurement and supply chain needs to reinvent supplier relationships to be more collaborative at all levels.
Supply chain risk management
21%
Supplier management technology
17%
Customer of choice
Performance management
If ever there was a time when ‘customer of choice’ was going to be tested it would be now. With wide-scale disruption it was clear delays and shortages would occur and suppliers would need to prioritise customers. For those – including State of Flux – who believe it is relationships not contracts that make a customer of choice, we wanted to learn how many companies believed they were treated as a customer of choice during Covid. The answer was around 7 in 10.
12%
Governance and oversight
The events of 2020 have been unprecedented. We have seen countries, businesses and, most importantly, people facing huge challenges. However, after just a few weeks it became evident that people and businesses were able to rise to the challenge and adapt rapidly. Amongst these were the procurement and supply chain community. In many cases they have reshaped supply chains in a matter of weeks to maintain vital supplies and protect their businesses.
10%
Does Covid change the business drivers for SRM?
Communication and information sharing
Nobody knows for sure how much Covid will change the future business landscape and if this will have an impact on the business drivers for SRM and supply chain management priorities. In the Value pillar analysis (page X) we identified the most common business drivers for SRM as risk reduction, cost improvement and supplier innovation. management priorities would be going forward. Improving risk management is the predominant theme. The gaps in some approaches to risk management have been noted by more than 60% and will be a priority to rectify. Linked to this is a refreshed look at sourcing strategies. More than half plan to bolster contingency planning and access to alternative suppliers. We asked companies what they anticipated their supply chain Just over 45% say they will look to boost collaboration with suppliers, while almost 40% will be looking for cost reduction. More work clearly needs to be done to make the case for investing in supplier management technology. Given that only one in five supply chain teams could go to a single system to access all the information they needed during the pandemic and it is one of the supply chain management areas most in need of improvement. Even if only the 22% that name it as a post-Covid priority follow through it would make a huge difference.
8%
Innovation
8%
When we started compiling this report we thought that by its publication in October we would be talking about Covid-19 in the past tense. However, it remains with us and is revealing new challenges every day. None of us can accurately predict the outcome, but it’s clear the cost in economic terms will continue to rise. However, even in the midst of this uncertainty we need to think how we will respond longer term and consider how we will rebuild and emerge stronger.
Relationship management
8%
What does this mean for SRM?
People skills and competence
For many companies procurement and supply chain have been in the spotlight like never before and have played a vital role in securing essential supplies. In the vast majority of cases the CPO, Head of Procurement or Supply Chain Director has been accountable at board level and instrumental in navigating the crisis. But what does the future hold? Do companies believe SRM will be more of a board-level priority following Covid-19? The answer we got was somewhat surprising in that only just over half (55%) believe it will be, with almost one in five (18%) saying no. While
8%
Collaboration and team working
6%
Other
Many businesses continue to experience unprecedented reductions in revenue and an uncertain future. In these circumstances the conventional wisdom is to look immediately to slash costs both internally and with third parties. Despite its apparent expediency this action alone won’t be the solution. While some tough decisions will have to be made many suppliers will be in an equally perilous financial position and short-term gains could result in simply pushing more supply chain risk and disruption down the road. If the global economy is to recover – and be in a position to move forward – procurement and supply chain needs to play its part. And that means reinventing supplier relationships to be more collaborative at all levels, not only at the strategic tier. The evidence of our research and a number of the case studies contained in this report demonstrate that working with suppliers collaboratively during the pandemic has made a huge difference. By the time we reach the business and economic recovery phase of this crisis, business leaders will have had supply chain on their daily dashboard for several months. The objective should be to keep it there, not because it’s in crisis but because it’s delivering strategic advantage.
2%
Snapshot analysis
Those familiar with the State of Flux 360° relationship assessment methodology will recognise the trust (behaviours) and control (process and systems) attributes of relationships in the responses to the questions about what went well in terms of supply chain management during the pandemic, compared to what didn’t go so well. It’s clear that the trust attributes stood up better.
If ever there was a time when the concept of ‘customer of choice’ was going to be tested it would be during this pandemic.
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2020 GLOBAL SRM RESEARCH REPORT
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