Why Adaptive Supply Chains Are Vital for Future-Proofing
From panic buying toilet paper and eggs to the boost in ecommerce, it’s safe to say that 2020 was a year like no other for nearly every business, in every industry, in every region. In fact, according to a recent report, 90% of companies expect the disruption of global supply chains caused by the pandemic to have a lasting impact on their business, with the majority (97%) of respondents agreeing that their network needs more transparency and better visibility.
Despite COVID-19 causing major upheaval for procurement professionals around the world, it has also accelerated trends that will not only lead to the diversification and localisation of supply chains, but also increase the need for digitalisation and end-to-end visibility. As a result, the tough lessons learned on managing supply chains in a crisis can help companies emerge stronger post pandemic, and can even drive lasting change.
Establishing digital and partner connectivity
In the midst of transformation, it’s critical that procurement leaders are prepared to withstand incoming shocks and respond quickly. This is where digitisation and strong partner relationships are so important. I like to call this a pivot in the traditional buyer-supplier relationship. The rapid supplier innovation we are seeing means that buyers in many areas really strive to be or become a buyer-of-choice to their suppliers. What does that mean? It means working closer, paying faster, raising the importance of fair and clean trade, and finding win-win situations for both parties to optimise trade. Making sense of data and digital communication sits at the core of this.
Leaders must have a pulse on the ‘digital heartbeat’ of their operations to know where they might be able to withstand risk and where they cannot. Based on recent findings from the Agile Procurement Insights Research conducted by SAP in collaboration with Oxford Economics, procurement functions that make greater use of technology – including AI and automation – achieve stronger business benefits, including better supplier performance, greater operational efficiencies and cost savings, stronger compliance and improved transaction accuracy.
And it’s clear that procurement digital transformation pays off through improved efficiency and cost savings. In fact, 81% of leaders say that digital transformation of their procurement function has improved supplier performance management. One SAP customer, NTT DATA Services, was even able to save $125M by digitising its procurement operations, which also helped the company protect itself from potential supplier disruptions. When leaders treat suppliers as partners, they collaborate more effectively (digitally) and build strategic, trusting relationships that go far beyond transactions. For this reason, suppliers should be viewed as heroes and valuable co-innovation partners that can help organisations be more agile and resilient to incoming shocks. When people come together, they achieve more.
"A business' future ability to pivot will have a lot to do with maintaining the flow of information in the supply network through digital channels and collaboration with a partner ecosystem"
Henrik Smedberg, Head of Intelligent Spend Management, UKI, SAP
Agility and Visibility
A business’ future ability to pivot will have a lot to do with maintaining the flow of information in the supply network through digital channels and collaboration with a partner ecosystem. Leaders in the procurement industry use supplier collaboration solutions to automate and speed transactions with suppliers. According to the above research, the vast majority – 92% – use a network to collaborate with suppliers and 61% use cloud-based collaboration solutions as their primary means of collaborating with external partners on key supply chain processes. Once connected and data is flowing back and forth, companies will be more risk-aware and can use that to power increased productivity and efficiency.
Another major factor in an organisations’ future ability to pivot – and management of risk – will be the diversification and localisation of their supply network. Diverse and local sourcing is one of the key ways to build stronger, smarter and more agile supply chains. It allows companies to be more proactive, rather than reactive, which will be essential in tackling new business challenges in a post-COVID-19 world. A good example is the Modern Slavery legislation that has been rolled out in the UK, Australia and other countries. It is interesting to see that doing the right thing is good for business. About 20% of the submissions to the Australian governments Modern Slavery Act has come from organisations that did not have to report on their practices to eradicate slavery. That shows that legislation is driving change even beyond those that have to comply. Consumer behaviours are making an impact to drive a better world.
Road to Recovery
It’s important to remind ourselves that the Covid-19 outbreak isn’t an isolated event. While undeniably the most impactful we have experienced in recent years, disruptions are increasing in frequency and magnitude, including geopolitical events, climate-related disasters and public health crises. It’s imperative then that we reflect on the supply chain vulnerabilities from 2020 to prepare for inevitable future shocks. As such, procurement is uniquely positioned to be transformative and highly impactful for businesses as we enter a new era of data-driven intelligence. Procurement can restore confidence as organisations seek to regain their competitive edge, revive their operational resiliency, and replenish their hopes for the future.
However, that level of confidence requires a seamless, integrated approach to digital business processes. Through dynamic partnerships, network strategies and data-driven insights, businesses will be more empowered and capable of avoiding repercussions from future shocks and shifts. Breaking away from reactivity and focusing on proactivity will be essential in tackling new business challenges and will also build stronger foundations and relationships for future stability and growth.
UK Food Supply Chain to be Exempt from COVID-19 Isolation
Vital workers in the UK’s food supply chain will be exempt from isolating after contact with COVID-19 under new emergency measures announced by the British government.
More than 10,000 people working in supermarket distribution centres, manufacturing plants and other food logistics services will be affected by the initiative. Staff who are told to isolate by test and trace or are notified by an official app will be allowed to continue working as long as they test negative.
The Department for Environment, Food and Rural Affairs said the scheme would undergo a limited trial this week after consultation with the country's biggest food retailers. It plans to extend the measures through a wider roll out next week, impacting around 500 sites dedicated to stocking supermarkets and producing staple foods such as bread and milk.
“Food businesses across the country have been the hidden heroes of the pandemic,” said Environment Secretary George Eustice. "We are working closely with industry to allow staff to go about their essential work safely with daily testing.”
Speaking to Sky News, Eustice added that the exception would not be extended to other sectors.
"The reason we have made a special exception for food is for very obvious reasons,” he said. "We need to make sure that we maintain our food supply. We will never take risks with our food supply."
UK Supply Chains Under Strain
The news follows reports of empty shelves and widespread shortages in British supermarkets after a record number of people were told to isolate via the NHS app. Branded the ‘pingdemic’, more than 600,000 alerts were sent out to phones and mobile devices in the week beginning 8 July, warning people that they had come into contact with those infected by the virus.
It left already strained food supply chains under staffed and unable to cope. The mass alert has also caused disruption in other supply chains, exacerbating a prevailing shortage of drivers and other essential logistics professionals.
Savid Javid, the Secretary of State for Health and Social Care, who was appointed last month following the departure of MP Matt Hancock, said: “As we manage this virus and do everything we can to break chains of transmission, daily contact testing of workers in this vital sector will help to minimise the disruption caused by rising cases in the coming weeks, while ensuring workers are not put at risk.”