Understanding the impact of Covid-19 on Procurement

Procurement functions have always been the heart of operations, managing complex supplier relationships and central to business profitability. With the impact of Covid-19, their expertise is now central to business survival and recovery.

The Procura Covid-19: Procurement Impact: Responses & Strategies survey was completed by over 200 senior procurement and finance leaders and examines the effect of the Covid:19 pandemic, the immediate responses to the crisis, and strategies for the recovery.

Conducted during the lockdown and with a view to economic restart, the survey revealed:

  • 87% of businesses have been negatively impacted,
  • A third of businesses are dealing with cashflow issues
  • Significant impacts to a high percentage of businesses’ supply chains,
  • High levels of supplier financial pain, with 14% dealing with supplier insolvencies
  • Strong upward price pressure

Procurement Leaders are employing a wide range of commercial and logistical responses; from collaborative supplier support, to commercial renegotiation and re-contracting, through to rapid sourcing of new suppliers and complete supply chain reconfiguration.

 

“Restart will certainly not be straightforward

The survey also highlights a timeline of challenges that will need to be addressed as economies unfreeze and businesses restart

  • Credit and cashflow causing friction in supply chains
  • Supplier liquidity problems and supplier insolvencies
  • Cost inflation manifesting in supplier price increases

Underpinning the responses, is a common view that procurement functions must become more agile, flexible, and responsive

Looking forward, Procurement Leaders outline a range of strategies. The themes are primarily around strategic de-risking; widening the supply base (developing new suppliers and supply routes, dual and multi-sourcing, near-shoring and domestic sourcing), and then monitoring and managing – not just tier-one suppliers but entire supply chains.

“Procurement Excellence will be a key differentiator for businesses in the recovery from the economic impact of Covid-19”

We provide eight actionable recommendations to guide procurement strategies in the next phases of recovery. You can download a copy of the report, insights and recommendations below:

 

 

If you would like to discuss any of the challenges outlined in this article or if you would like some expert support, please get in touch on+44 (0)203 693 7275 or Email us: info@procuraconsulting.com