- Thirty-four percent of procurement leaders believe coronavirus disruption has already peaked, while 49% believe a peak will come between June and December, according to a recent survey of 605 procurement and supply chain leaders conducted by Procurious.
- While 97% of respondents reported supply chain shakeups as a result of the pandemic, only 17% reported severe disruptions. Nearly 50% said the effects were minor to moderate. Respondents said key challenges were decreased demand for certain products, production and logistics slowdowns, and travel restrictions.
- Procurement's "on the ground view" of the supply chain has been a bright spot amid the current uncertainty, Tania Seary, founding chairman and CEO of Procurious, told Supply Chain Dive in an interview. Experience putting out fires under normal conditions allowed teams to leverage the risk mitigation best practices they use "to keep the supply chain running every day." However, even if the pandemic's disruption has peaked, procurement will need to continue to innovate, Seary said.
Mitigating supplier risk throughout the coronavirus pandemic has been a steep learning curve for supply chains. Procurious found that before the outbreak 29% of survey respondents "didn't understand the upstream supply chains of their suppliers." In spite of this, 79% said they have since been able to put alternate suppliers in place, and 53% said they were able to do so within three weeks of a need arising.
While establishing networks of alternate suppliers has helped keep supply chains moving throughout the past six months, the report found a lack of technology investment to be the top regret procurement teams have about how things have gone thus far.
"If you're not in front of your C-Suite, pitching an investment in new technology, you're missing a huge opportunity," Seary said, "because we can actually quantify the impact now, potentially, of not having that visibility" when looking at the negative impact this has had on companies in the industry.
With all the movement going on in the sourcing world — shifting out of China and moving operations into Southeast Asia or Mexico, or consolidating sourcing regionally — investing in visibility and enabling the supply chain to be proactive and agile will be critical, Seary said.
"In the last 20 years, the old fundamentals and beliefs about supply chain have been lean inventory, global sourcing, optimum single supply," she said. "You know, these are the things that have been the fundamental truths that we base our supply chain strategy on. And I think this disruption has totally questioned all of that."
Research from the Boston Consulting Group found that regionalized and diversified supply chains are better equipped to weather the disruption the pandemic has caused, as managers can shift operations between suppliers as needed. However, making those shifts requires sourcing teams to be able to identify needs and qualify vendors remotely, at least for the time being. As a result, despite current economic challenges, some managers are making the choice to spend extra cash on upgrading data analytics and virtual collaboration technology tools.
It's especially important for procurement teams to consider hanging on to the networks of alternate suppliers they've built, Seary said, as the uncertain economy ahead could spell the end for vulnerable vendors worldwide. In fact, according to Procurious' separate survey of supply chain CEOs, 30% said they have already had at least one supplier declare force majeure.
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