How severely has COVID-19 affected supply chains, and what’s next for procurement and supply chain leaders? To find out, Procurious surveyed over 600 procurement, supply chain and business leaders earlier this year.
An incredible 97% of organisations surveyed revealed that they had experienced a supply chain disruption directly related to COVID-19. The report also revealed that 50% of respondents said the impact was minimal or moderate and only 17% believe the supply chain disruption to be severe. Procurious dug a little deeper to reveal that the biggest impact of COVID can be broken down into four areas:
31% of respondents saw a decreased demand for their products and services
26% felt a real lack of available supply due to production downtime and shutdowns
21% suffered logistics and transportation delays
And 19% experiencing significant capacity and productivity issued as a result of travel, social and work restrictions being imposed
The worst is yet to come?
While the world continues to work together to move on and overcome the pandemic, there is still a belief that while the damage done has been incredibly severe, the worst may still be yet to come. 34% of business leaders said that they had already seen the biggest impact, 15% believed June was going to see the worst of and 21% believed that the period of July and August will be the worst. Could it be September through to December? When the traditional flu season rears its head? 13% of people believe so as they fully expect us to experience the peak damage of COVID during this time. The challenge that we all face is that quite frankly, we just do not know. There is no right or wrong answer, we just don’t know for sure and 13% of respondents echo this sentiment saying that they simply do not know what the road ahead is going to look like.
One interesting note here, which we at CPOstrategy are particularly intrigued by, is that 1/5th of CEOs believe the biggest impact will be between September and December – meaning they actually do not align with the CPO’s thoughts. Is this a sign that a lot of work is still needed in order for the CEO to truly believe in and engage with the CPO and procurement function?
With age comes experience. Right?
In the age of information it is perhaps most frustrating that we can never truly have all the answers we need. Experience teaches us many great things about handling crisis and downturn, but does experience mean that some can handle this situation more successfully than others? Does it mean some have a better grasp as to when this is likely to fade away and ‘normality’ can resume? Looking at the different age groups across the procurement board tells us an interesting story. Millennials were most likely to assume it already peaked (44%), followed by Baby Boomers (34%) and Gen X (31%). In actual fact, more Gen Xers (40%) and Baby Boomers (41%) claimed ‘it’s too early to say how their business will be impacted than millennials (25%).
What do we know about the so-called ‘new norm’?
The phrase “the new norm” has been used and overused almost every single day of this pandemic, and much like anything with regards to the future we simply do not know what that ‘new norm’ will even look like, especially in the supply chain ecosystem. The survey has tellingly revealed that 29% of respondents, at the onset of the crisis, did not understand the upstream supply chains of their suppliers. With 6% of organisations saying that they had a key supplier go out of business and 30% of CEOs admitting that they have had a supplier enacting force majeure, this new norm will be a very different landscape. In response to this, 65% of organisations were forced to find new suppliers. So what have organisations learned already? Over half (58%) are still operating and paying their suppliers per their contract, 14% of organisations are speeding up payments to suppliers and 6% are providing direct financial support. Looking at it from a different perspective, more than 20% are providing less favourable payment terms for their suppliers – with 10% reporting that they are delaying payments to all suppliers, and another 11% reporting delayed payments to non-strategic suppliers. Whatever form it ends up taking, the new norm will be a very strange and uncertain beast for many.
The CPOs and the SCO’s: The future starts now
Garnering and sustaining interest in procurement and supply chain careers in a pre pandemic world was a constant challenge when looking at the younger and future generation. Naturally, given the key role that procurement has and will continue to play in this pandemic, this has changed dramatically with nearly 62% of all respondents and 71% of millennials saying that their interest in procurement and supply chain has increased. Would a pandemic decrease interest? Well, 2.5% of respondents said the stressful and chaotic nature of managing supply during a pandemic caused their interest in the function to decrease.
So let’s look at Generation Next (Gen X). There is an expected increase in investments in talent development and new opportunities for practitioners to rise through the ranks and make their mark at the executive and board level. When asked to reflect on personal job performance, millennials were most apt to believe they stepped up and delivered (36%), followed by Gen X (27.62%) and Boomers (21%). The overall positivity and energy from the profession is very promising, as the impending structural changes needed to make the supply chain more resilient will require a massive commitment from all key stakeholders.
Why not read the full report below:
To find out how severely COVID-19 has affected supply chains, and what’s next for our profession, Procurious surveyed over 600 procurement, supply chain and business leaders over a two-week period from April 28 through May 12. Downloading your copy of ‘How Now?’ is as easy as pie.
You can also read to our exclusive interview with Tania Seary, Founder of Procurious:
Podcast: Tania Seary, Founder of Procurious, discusses falling in love with procurement – B2e Media Ltd.
Tania Seary, one of the most globally influential members of the procurement & supply chain world joins the Digital Insight to discuss what made her fall in love’ with procurement and how Procurious, the world’s first and leading online business network dedicated to procurement and supply chain professionals, was truly ‘ahead of its time.