Procurement COVID-19 response
Wider macro risks affect the entire business world and the extended supply chain. Managing procurement risks and cost need to be the priority to adjust to the new economic reality and coordinate investments reducing the complexity of supply chains while at the same time improve supplier transparency.
It is time to build a future-ready sourcing and procurement function
COVID-19 has disrupted the business world and challenged supply chain reliability. Sourcing and procurement functions are facing demand imbalances leading to inventory challenges , uncertain reliability of delivery as well high risk of risk to supplier in single-source supplier situations. Non-transparent supply chains and a new reality require flexibility and additional focus on sourcing and procurement functions along with risk management to sustain operations and thrive as a successful business in the future.
To build such capabilities, to have the ability to react flexibly to the challenges in the business environment as well as meet the needs of the organisation, Deloitte has identified key issues along the crisis response framework Respond, Recover and Thrive.
First, to ensure security of supply from existing suppliers, give priority to achieving visibility in the immediate and extended supply network. Second, stay close to your customers to identify changing demand patterns. Third, rethink your ways of working and revise the operating model to make the procurement function a proactive business partner. Fourth, to build a future-proof procurement function build in resilience by investing in risk management capabilities and digital procurement tools.
Four key topics in Recover
Today*, most industries are in the recovery phase and it is of vital importance to act on the experiences of the COVID-19 crisis and reshape sourcing and procurement functions. To emerge stronger the functions need to structure their recovery and address four key topics:
- Visibility is precious: Enhance the visibility of your supply network to identify risks and capacity constraints
- Supply is diversified: Assess the financial health and reliability of your suppliers, and strengthen the collaboration to leverage cost optimisation potential
- Stock is rebalanced: Rebalance stock levels and reassess your category strategies to align with post-COVID supply chain planning
- Customer demand is changing: Be close to your customers to understand how their needs may have shifted
Please read more in on our COVID-19 sourcing and procurement response, the importance of managing procurement risks, and strategic sourcing issues that need to be addressed by the leadership.