How procurement navigated lockdown and what’s here to stay
The Covid-19 crisis and its economic fallout, and changing business behaviours, are disrupting the world of procurement. To understand what procurement lessons there are to learn, we spoke with John Thorpe (a Director at Ayming) and Philippe Carlotti (Head of Global Supply Management at Sodexo Benefits and Rewards Services) to gain insight in the impact of the pandemic and key learnings going forward.
How did the pandemic impact the procurement function?
Philippe Carlotti: Once the pandemic had really started to take a toll on business operations, our transformation team’s focus pivoted from pure value optimisation and operating model improvements to measuring and monitoring our supply chain resilience as well. From a procurement perspective, ensuring our entities could continue to deliver products to consumers trumped all other matters.
This was a stress test like no other, and whilst a strong understanding of our supply base and business continuity and disaster recovery (BCDR) plans existed and were in place for the critical parts of our supply chain, ensuring these plans were executed in practice on an unprecedented scale across multiple geographies, required careful coordination and significant effort from our cross-functional teams.
John Thorpe: There has been an urgent need to reassess existing operating models as companies must adapt to the changing business environment. One aspect of this relates to skills. I believe there's a demand for a broader set of skills for procurement professionals.
As the pandemic forced organisations to fundamentally rethink approaches to their supply chain and internal operations, procurement is in a place to identify synergies and risks across the business that many other functions may not be able to identify. This means that procurement can't be so blinkered as to only look at a category view or potential short-term fixes and are in a position to drive idea generation in what will be a very challenging business environment for many organisations going forwards.
What has been your key learning from the lockdown?
Philippe Carlotti: Although siloed ways of working were never encouraged before, during a pandemic, they are unthinkable. Those teams that have been flexible have allowed procurement functions to be better placed in the long-term to partner more effectively with strategy & operations. This partnership should be a significant value generator going forwards.
John Thorpe: When I reflect on the year, I believe that the power of adaptability and flexibility has been the difference-maker, both at the organisational and employee level. Taking our consultancy as an example, we had to quickly assess what was most valuable to our clients, as pre-Covid-19 transformation objectives or scopes of work were most likely less relevant (at least in the short term) than when the engagement first started.
Expanding this to a macro-level, this type of interaction and decision-making will have been going on everywhere. Despite the challenges of the year, I believe that procurement is more relevant than it ever has been, and the pandemic will have improved long-term cross-functional and cross-organisation collaboration materially.
What permanent procurement trends are we likely to see post-pandemic?
Philippe Carlotti: Beyond the backdrop of the pandemic, another area of importance is the impact of ESG on procurement decision-making. As a function, we must be responsible for ensuring that the different aspects of ESG are considered and that we use our knowledge to translate organisational objectives in our assessment of suppliers proactively.
In this regard, procurement sits in a unique position, where we can see what hundreds of industries are doing to tackle ESG proactively and understand best practices as a result. If anything, the pandemic has reinforced the importance of being a better corporate citizen and encouraged us all to be more deliberate in driving positive change through our business decisions.
John Thorpe: As Philippe mentioned, supply chain resilience has been a prominent topic. What I believe this will mean more broadly in the long term is that supply chain resilience will play a far more important role in supplier selection and ongoing supplier relationship management than we have seen previously.
We have also seen a strengthening of supplier relationships for those willing to be flexible, open, and honest during this time. That level of collaboration and support within an organisation’s supply chain during adversity will translate into stronger and longer-term relationships in future years.
Whether this focus will mean an entrenching of existing supplier relationships for those who performed well or a greater need to re-organise will depend a lot on the industry and category.
John Thorpe is a Director in the Operations Performance practice of Ayming, Philippe Carlotti is Head of Global Supply Management at Sodexo Benefits and Rewards Services.
