When the COVID crisis hit, organizations had no choice but to respond to the challenges they faced by leveraging the resources they and their suppliers had at their disposal. Clearly, some were better prepared and responded with more resilience than others. Now we are many months into the crisis, and it's time to look at what went wrong and what organizations should change going forward.
2020 has been quite a year for global businesses and especially for supply chains.
Just in the first six months of the year, the world has already witnessed some defining moments. Looming trade wars between the U.S. and China, preparations for the post-Brexit economy in the Euro zone, and an increasing focus on sustainability and environmental consciousness are all ongoing.
Though one can argue that none of these moments took the world by surprise, they did push global supply chains to review and re-engineer their operating models.
We know that procurement is often a juggling act! We use decent supplier relationships, purchasing power, and any other tools in our belt to secure best payment terms, highest quality purchases at the lowest price, or indeed best value, to ensure vital continuity of supply against a backdrop of supply chains becoming ever more complex and volatile!
The worldwide crisis made us hyper-aware that trust-worthy relationships are vital. Effective third-party risk management is the best way to gain assurance that responses and decisions are risk-informed. Managing third-party relationships, calibrated for criticality and risks, has never been more critical. This is the most reliable path to strengthen business resilience, protect stakeholders and the bottom line.
One of the most significant procurement trends we’ve seen so far in 2020 is delivering value beyond savings. So what exactly does this mean in the context of the function’s traditional goals?
Savings, as we all know, have long formed the foundation of procurement’s ROI to the organization. It’s been our primary charter over the years and is quite literally how the function has “paid its bills.”
Legislation regarding the environment, modern slavery and other sustainable procurement laws are coming into force at a breakneck pace. By embracing change now and adopting ethical and sustainable procurement, organizations can get ahead of the curve. Also, this socially responsible commerce movement is being thrust into the forefront of how business will operate moving forward, given the guidelines for the recent stimulus bill passed in the U.S.
Suppliers are mission-critical partners for business success. Unfortunately, too often, an “arm’s length” relationship creates problems that are revealed only after it’s too late.
When suppliers feel conversations only occur after poor performances, the opportunity to have a productive, collaborative conversation may already be over.
Procurement is old. Just how old you ask? Well,
a long time ago in a galaxy far, far away… it’s been around for millennia. As a natural function of trade and commerce, it developed organically during the earliest civilizations. Papyrus records indicate procurement can be traced as far back as the Egyptians (the first Jedi) in 3000 B.C.