Opportunity - Issue 94

PROCUREMENT
Becoming
risk-savvy
POST-PANDEMIC PROCUREMENT
POST-PANDEMIC PROCUREMENT
Procurement is at the heart of Covid-19 crisis management and has taken an active
role in mitigating the immediate impact of the pandemic. Now, as companies brace
for the crisis’ long-term impact, a clear shift in mindset is needed.
Since the Covid-19 pandemic began battering
the world, procurement professionals of almost
every company have been rethinking their
supply risk management capabilities. Most are
grappling with little else today, as they try to
figure out how best to cope with the current and lasting
effects of the crisis.
How, and what, are they doing?
To find out, international management consultancy,
Kearney, recently conducted a global procurement
survey on the impact of the pandemic. In the survey,
Kearney asked procurement professionals how well
prepared they were for the pandemic at its onslaught,
procurement’s reactions to the immediate crisis, the role
procurement has played in bracing their companies for
the crisis’ longer-term impact, and how their mindset
about broader risk management strategies has changed.
Here’s what was learned:
___ __ ____ _ _
The pandemic crisis
has put a dramatic
emphasis on the
need for a balanced
scorecard approach to
measure the full impact
of procurement
___ __ ___ _
PLAYING AN ACTIVE ROLE
Procurement is at the heart of most global companies’
crisis management efforts and plays an active role for
more than 70% of respondents. In these companies,
procurement is regarded as a peer with the other
organisational functions. It has a seat at the table and a
substantial voice in managing the Covid-19 crisis.
As the interface between the company and its
suppliers, procurement is in a unique position to
understand who the most vulnerable partners in
the supply chain are and take the right measures to
protect those most at risk. In about 30% of the companies
– especially those in smaller revenue brackets –
procurement has taken on a primary leadership role
and coordinates the cross-functional teams in day-today
crisis management and operations.
Some companies, though, are slower in getting their
herd over water than their competitors as the Covid-19
pandemic has exposed major weaknesses in their
supply chains – in particular around S&OP processes,
inventory control, and stock keeping unit (SKU)
complexity – which are compounding day-to-day crisis
management efforts.
Nevertheless, about 60% of companies have moved
beyond survival mode and started to look beyond the
crisis’ immediate impact.
They are operating in the current environment and
starting to plan and adapt for the post-recovery new
normal by assessing the impact of the crisis on their
broader risk management approach and adapting
category strategies based on scenario analysis for
the new normal. Procurement has a significant role to
play here.
___ __
Today, only 34% of
companies have a
well-defined supply
risk management
strategy explicitly
linked to their
core procurement
activities and
dynamically
refreshed based on
external situation
and internal
demand changes
(see figure, right).
www.kearney.com
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