Supply Chain Is Bigger Than Ever in 2012
As American manufacturing is hauled back from the brink and the economy picks up steam, effective supply chain management will grow dramatically in importance, according to Rick Blasgen, President of the Council of Supply Chain Management Professionals.
“The supply chain is a shock absorber, managing the difference between what is planned and what actually happens,” Blasgen said in a speech at the Modex Show in Atlanta. “We facilitate a lot of what happens in our economy, and we don’t get a lot of credit for it.”
Guilt-laden regrets and belated well-wishes for supply chain managers everywhere can be sent to the SCD offices, where they will either be promptly forwarded to their rightful recipients or discarded unread.
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Joking aside, Blasgen’s message is well-taken: proper supply chain management is critical to all companies, and with globalization proceeding apace, it’s getting more attention than ever. Where things come from, how your workers are treated, and what you do about it goes a long way towards shaping the future.
It’s not just Blasgen’s opinion, or even a veteran supply chain manager’s point of view: it’s a documented fact that supply chain interruptions are poisonous to profits. A recent Georgia Tech study cited by Blasgen in his speech demonstrated an average 8% drop in stock price “when something goes wrong with the supply chain.”
Will Public Procurement Budgets Increase in 2021?
Procurement is more than just a private enterprise. COVID-19 reminded us that sourcing materials is an essential part of the government’s role. Throughout 2022, tiny departments sourced massive amounts of personal protective equipment (PPE), medical supplies, and emergency vaccines and testing kits. Even non-procurement professionals were pulled into the fray, as frantic timelines demanded nothing less.
According to Celeste Frye, co-founder and CEO of Public Works Partners, the crisis brought procurement to the attention of skilled employees who had never considered it. As non-procurement personnel stepped up to help their coworkers, many found that they’d stumbled upon a critical and rewarding job. “Existing public employees have seen the essential nature of the work”, Frye said. “[They’ve] gained some critical skills and possibly [grown] interested in pursuing procurement as a longer-term career”.
Small, Local Suppliers Take Charge
Frye, whose firm helps organisations engage stakeholders and develop long-term procurement strategies, thinks it well worth the effort to open one’s mind to new opportunities. Cooperative contracts, for instance, can help public departments and municipalities save money, time, and effort. By joining together with other towns or cities in the region, public procurement teams aggregate their purchasing power and can drive better deals.
These cooperative contracts have the added benefit of advancing equity. Smaller suppliers that struggle to compete with established firms for government contracts can act as subcontractors, helping big suppliers fulfil bits of the project. Once they get their foot in the door, small, local, and disadvantaged suppliers can then leverage that government relationship to take on additional projects.
Especially as governments start to pay attention to procurement resilience, public procurement departments must expand their requests for proposals (RFPs) to take into account innovative solutions and diverse suppliers. According to Frye, Public Works Partners—a certified female-owned firm—has benefitted from local and state requirements that specify diversity.
Post-Pandemic Funding Swells Procurement Budgets
And the pandemic won’t be the end of it. City governments need to build sustainable energy infrastructure such as solar panels, charging stations, and recycling plants, ensure that masks and medicines are never in short supply, and source new technologies to keep up with cloud and cybersecurity concerns.
Public procurement budgets will likely increase to match demand. As Peter Ware, Partner and Head of Government at Browne Jacobson, explained, “in a non-pandemic world, the [U.K.] government spends on average around £290 billion on outsourced services, goods, and works...anywhere between 10% and 14% of Gross Domestic Product (GDP). Post-pandemic, city procurement will only increase as national governments provide local divisions with emergency funding.
And in truth, government employees might jump at the opportunity. Frye noted that public procurement could give immediate feedback on new programmes: “[Procurement] is where new laws and policies ‘hit the road’ and are implemented”, she said. “Professionals in these fields get the satisfaction of creating real change and seeing quantifiable outcomes of their work”.