Dan Collings

13 April 2020
Topics in this article
  • Cost Optimization
  • Strategy & Planning

Observations from EVP of North America – Dan Collings, April 13th

The last few weeks have been extraordinary. Certainly, in living memory, there has not been an economic contraction as swift as the one we are seeing unfold. During this time, Procurement leaders have played a critical role in helping businesses manage these extremely challenging conditions – in some cases, they have enabled businesses to meet vast levels of demand. In others, they have ensured that their businesses simply survive or live to fight another day.

As swiftly as things have changed, many businesses are already looking to the future. Based on our observations, these are the five common themes that Procurement Leaders are considering for the post-COVID world.

1. Welcome to the new normal

Even once this pandemic is under control, the world as it was is not going to return. Consumer behavior will be different, decision making in businesses will be altered, and attitudes to risk will have shifted. The best businesses are already turning their attention to what the new normal will look like and how leaders in Procurement can enable them to take advantage of the modern landscape.

2. Supply chain visibility and resilience will take on new importance

In recent years it seems the most frequent question asked of a CPO is ‘How much have you saved?’. While important, the prioritization of short-term financial savings over ensuring supply chain visibility and resilience has shown by this crisis to be short-sighted. Going forward, we need a renewed focus from senior business leaders in ensuring they have visibility over their supply chains and that resilience is built-in. This may mean a combination of digitally managed, and, or simply less complex supply chains. Technology, consumer, and market behaviors will steer us.

3. Expect to see consolidation across the business landscape

This economic downturn will leave many companies in a significantly weaker position, and the reality is that this will lead to an uptick in mergers, acquisitions, and collaboration. Procurement will be essential in helping businesses manage these events and reap the rewards from consolidation. Supplier management will emerge from the shadows, perhaps now a business imperative rather than just a questionable business case.

4. Procurement sector priorities will change

2019 was the year for sustainability. But many bold plans concerning sustainability will be extremely challenging to deliver in a post-crisis environment. Sustainability will likely slip back down the business agenda, meaning procurement teams will need to help their companies ‘box smart’ by making progress on this issue within constrained budgets. ‘Greenwashing’ will be exposed, but it is important to consider that as competition intensifies, for some, sustainability will continue to be a key competitive differentiation, companies will need to work hard to attract the consumer share of wallet.

5. This crisis shows why talent matters

CPOs have found themselves firmly at the top table in recent weeks. This is deserved, but it reminds us of the importance of talent if we want CPOs to remain at the table, for the long-term. The changes outlined above also mean the procurement skill-set will need to change. Recruiting the right people and up-skilling for the post-COVID normal will be critical.

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These are challenging times, but Procurement and Supply Chain will play an essential role in ensuring businesses emerge stronger as the pandemic subsides. I hope these insights equip you for the months ahead, and I am looking forward to joining you all in the “new” normal.

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