Change

Three procurement experts share their strategies for mitigating supply chain risk after 2020.

The Economist put it best in July 2020: "You may have lost interest in the pandemic. It has not lost interest in you. COVID-19 is here to stay. People will have to adapt. The world is not experiencing a second wave: it never got over the first."

This reminder rings true for procurement and supply chain leaders.

The seasonally-adjusted Absa Purchasing Managers' Index (PMI) increased to 53 index points in February 2021 from 50.9 in the previous month. The further increase (January 2021 was 0.6 points up from December 2020) was supported by three of the five sub-components gaining relative to January. Only the Employment Index moved lower, while the Supplier Deliveries Index also ticked down but remained well above the neutral 50-point mark and thus supported the headline figure.

By Sammeli Sammalkorpi

During the past few months, I have discussed with a number of chief procurement officers (CPOs) how they have managed procurement during COVID-19. One recurring answer was along the lines of 'we broke all of our processes and went into wild-west-mode'. Now, many said this with an interesting combination of sadness and pride. Sadness that they had to give away great processes perceived to be the basis of any professional procurement organisation. Pride and excitement at how procurement teams were able to improvise, work hard and survive.

As an unprecedented 2020 trickled into 2021, it has become abundantly clear that competent and proficient supply chain management is a major catalyst when it comes to sustainable economic growth.

With this in mind, the IMM Graduate School has added two new, cutting-edge supply chain management qualifications to their offering: a Higher Certificate in Supply Chain Management (NQF5) and the BCom Honours in Supply Chain Management (NQF8).

"One of the sales trends for 2021 is procurement needs to be solutions salespeople too," says By Sue Barrett, Founder and CEO of www.barrett.com.au and www.salesessentials.com

Times are, indeed, changing with the procurement function becoming increasingly important as a conduit, an orchestrator if you will, for the co-creation of value with suppliers and internal stakeholders as well as right down the value chain to end-consumers and back again.

Procurement can no longer rest its case on 'lowest cost', 'cheapest price' or 'supply of goods and services'; it must assume responsibility for the creation and delivery of real value beyond price and general supply.

This sales trend highlights how the skills, knowledge and mindset of procurement professionals are being expanded to include the capabilities of highly-competent solutions sales professionals.

By Steve Banker, Vice President: SCM, ARC Advisory Group

Customer loyalty begins with excellent service and timely delivery. Companies have come under pressure to unify their buying experience across channels, capture orders easily, and deliver them rapidly and accurately.

When it comes to gauging the loyalty of an organisation's customer relationships, the net promoter score (NPS) survey typically represents best practice. The NPS is correlated with revenue growth and calculated based on responses to a single, simple question: how likely is it that you would recommend this company/product/service to a friend or colleague?

The seasonally-adjusted Absa Purchasing Managers' Index (PMI) declined further to 50.3 index points in December 2020, down from 52.6 in November. This is the lowest level since July 2020.

The reading just above 50 index points suggests that growth is levelling off in the manufacturing sector after solid month-on-month gains were recorded in the wake of April 2020's lockdown-induced plunge in activity.

"Despite a strong start in October 2020, the average reading for Quarter 4 is basically unchanged from Quarter 3, which suggests that while another quarter-on-quarter uptick in manufacturing output is likely, the pace of the recovery momentum has slowed", noted the Bureau for Economic Research (BER) in a statement.

The Absa Purchasing Managers' Index (PMI) declined to 52.6 index points in November from the solid 60.9 points recorded in October. The decline comes after three consecutive upward moves and brings the index to the lowest level since July 2020.

While still signalling an improvement in business conditions, the drop suggests that the manufacturing sector's recovery is starting to lose momentum. This was to be expected as output levels for many subsectors are nearing pre-pandemic levels and will need sustained growth in demand to fuel a further output expansion, noted the Bureau for Economic Research (BER) in statement.

By Stephen Bauld

The COVID-19 pandemic looks like it is entering the next phase. We could be looking at a long time before we get back to the new normal and leadership in procurement will help to shape the wellbeing of organisations moving forward.

The argument that organisations need to begin now to train their next generation of leaders is not intended to suggest that a programme of study will produce leaders that are great. Although it can be stated with some confidence that the systematic study of leadership will produce leaders who are better than they would be without it, great leadership is a very difficult thing.

Following a robust increase in August 2020, the Absa Purchasing Managers' Index (PMI) ticked up further to 58.3 index points in September. The shift to a lower lockdown level mid-month likely drove the further improvement in business conditions in the local manufacturing sector.

However, the Bureau for Economic Research (BER) cautioned that the fact that the level of the PMI is now above pre-pandemic levels does not directly translate to official manufacturing activity being back to pre-pandemic levels.

"Owing to the month-on-month comparison asked for in the PMI questionnaire, the high level merely means that conditions continue to improve (with more respondents reporting an increase in output, for example, instead of no change or a decline compared to the previous month). This can still be entirely consistent with the level of output remaining well below that recorded prior to the lockdown", said the BER.

By Ian Holcroft

As you move forward with your career, remember that it is not just about the number of connections that you have - it is about the quality of your connections. As the old adage goes: it is not about what you know, but who you know.

As the majority of us spend more time working from home in the 'new normal', being connected is more important than ever.

Right now, as the COVID-19 pandemic takes its toll on jobs, consumer spending and the global economy, many businesses are scrambling to adjust to a new financial reality. They are also coming to terms with the fact that the path to recovery remains long and mostly uncertain. Experts, including Deloitte, predict that the United States (US) economy will not bounce back until mid-2021. The Bank of England is anticipating slower recovery, as late as the end of 2021, for the United Kingdom (UK).

Within organisations, the Chief Financial Officer's (CFO) voice is one of the most critical during a crisis. But contributing directly to a firm's financial resilience is the Chief Procurement Officer (CPO), who has a strategic role in leading a firm through the tough times ahead.

Spend Matters spoke with a CFO who has many years of experience across corporate finance and public accounting, and is currently the CFO of spend management firm Jaggaer. Spend Matters asked Jeff Laborde how he sees Procurement and Finance best working together to drive benefits across a business, given their natural overlap in priorities and responsibilities.

In late July, Digital Procurement World (DPW) brought together some of the world's most progressive chief procurement officers (CPOs) for a virtual roundtable discussion on how the ever-changing digital environment can help procurement challenge the status quo and design operating models that deliver both innovation and value.

Matthias Gutzmann, Founder of DPW, gives us the key takeaways from this discussion:

By Gordon Reid with input from Mieka Cleghorn, SA Managing Director, Transparent

As a semi-retired business executive, and after spending the past twenty plus years working for some of South Africa's leading companies, the COVID-19 lockdown has afforded me valuable time for some serious thinking.

Many businesses will need to change the way they operate to remain afloat. Useful insights and lessons from company closures will undoubtedly surface in time, but for now we should focus on the future and what can be done now to keep our businesses running.

The intention of this article is to stimulate discussion, thought and imagination with a view to developing a roadmap to traverse the rocky road to economic survival post-COVID-19.

The Absa Purchasing Managers' Index (PMI) for July 2020 declined slightly compared with June, but continued to signal a further month-on-month improvement for conditions in the manufacturing sector. The PMI declined to 51.2 index points in July, from 53.9 in June, thereby staying above the neutral 50-point mark for a third consecutive month. This suggests that official manufacturing output should still reflect a month-on-month improvement in activity, but that levels are stabilising and that July's increase is likely to be significantly less than those signalled by the PMI in May and June.

SmartProcurement has joined forces with SAPICS to offer Africa's largest-ever online event for supply chain and procurement professionals.

Africa Supply Chain in Action takes place on 19 and 20 August 2020. It is expected to bring together more than 1 000 supply chain and procurement professionals.

The Absa Purchasing Managers' Index (PMI) for June 2020 showed that conditions continued to improve in the South African manufacturing sector. This is after most of the sector came to a near standstill during the nationwide Level 5 lockdown in April 2020 and only partially returned to normal production levels in May 2020.

The headline PMI rose further to 53.9 index points in June, up from 50.2 in May.

Importantly, while the headline PMI rose to a multi-year high, this does not mean that the level of actual manufacturing production rose to a multi-year high. "Instead, the further rise in June merely means that a solid month-on-month increase was likely recorded", said the Bureau for Economic Research (BER).

Do we need to fundamentally re-imagine what our procurement eco-system looks like? Ian Thompson, Regional Head at Ivalua, thinks so and here is why...