Purchasing strategy: post-lockdown

The role of purchasing in preparing for life post-lockdown and developing a resilient business model

The current health crisis has led to weaknesses in our entire ecosystem. This situation has been exacerbated by the practice of outsourcing business over the past decade. We therefore need to prepare for the safe resumption of business activity after the lockdown and develop a resilient model.

This strategy will be based on the following three points: risk management, sourcing and appropriate business management.

Risk management

Risk management is key to securing supply.

Various scenarios will need to be identified, based on demand forecasts, stock levels and potential partners that may be able to fulfil these requirements. Anticipation and prevention are key here. This is what we need to do:

• Establish the various scenarios and generate repeated updates,

• Reschedule priorities and redefine their urgency (new product launches, innovations, etc.),

• Work on the panel: re-classify level 2 or 3 suppliers, which may interrupt the logistics chain (e.g. a small transporter could interrupt the logistics chain).

The plan for the 2007/2008 crisis, which was to rely on reducing costs and low-cost sourcing, will therefore not be applicable.

New sourcing strategy

The strategy for securing supply involves defining “urgent” requirements and identifying the parties/partners that could fulfil these requirements.

Sourcing will therefore be at the forefront of this new era.

The following mechanism will need to be applied to adapt the supplier strategy:

• Map the businesses that are changing destination,

• Promote the principle of proximity and local presence,

• Support changes of destination.
  
  

Criteria

The objective will no longer be to aim for high volumes and low costs, with the focus instead being on responsiveness combined with quality.

Many of us have seen a growing decline recently in the level of imported products, particularly when it comes to medical and first aid equipment.

Do not exclude the CSR angle, which will always remain a possibility:

• Include the adapted sector, which is just as flexible and able to fulfil QCD requirements as an ordinary company (my work with purchasing departments over the past few years has demonstrated that management teams have not yet opened up sufficiently to this subject).

• Encourage innovations, since it is precisely in these times of crisis that the best innovations come to life.
  
  

Multi-sourcing

Standardising requirements, implementing polymorphic structures and “Taylorising” demand will no longer work over the short to medium term. We need to be supported by a number of different partners and facilitate communications with suppliers.

Perhaps this will be how we can start generating goodwill?

Stocks will tend to go down very rapidly, and a limited number of partners will only cut down the potential for procurement.

Our “Procemo solidarity: procurement support for medical services” experiment

We have worked out that multi-sourcing is facilitated by local networks and the support of prescribers for product names or generic modifications (e.g. replacing scrubs with disposable hairdressing aprons). Flexibility will therefore be a vital component here.

Tools

Digitisation of data (from various channels) will also be an essential prerequisite for success, with the support of e-sourcing technology to benefit from supplier referencing.

Suppliers are increasingly using listings on Marketplace type software and, depending on their level of maturity, may also offer punch out catalogues.

So, to sum up, use your network! In this situation we have been relying on our network of multi-sector consultants.

This feedback has allowed us to become more responsive!

Crisis situation: change management & adapted management of multiple construction sites

Fast and successful change management involves introducing and controlling the following elements:

Control

• Set up appropriate, regular monitoring, both internally and with suppliers.
  
  

Communications

• Set up daily external communications with suppliers to measure their stock levels and get a view of their own procurement,
• Facilitate internal “multi-skilled” communications in stand-up meeting mode (SQCDP type).
  
  

The adapted process

• Introduce seamless and appropriate digital processes and software (e-procurement type): to increase responsiveness and be able to place urgent orders whilst still controlling purchasing,

• Develop a secure P2P process to avoid increasing the risk of losing partners due to “worries about paying bills”.
  
  

The legal context

• Extensively update contract clauses to bring them in line with developments in the legal framework, such as changes to the “case of force majeure”.
  
  

Conclusion

In order to respond and adapt rapidly to this new system, each department will need to deal with major changes in strategy.

The more moderate competitiveness of our partners could be used as a benchmark, without being allowed to restrict our business.

Some would say that this crisis situation will not have any beneficial impact on our ecosystem. However, should we review our model of massive delocalisation to reposition our demands geographically? We want to believe in this overhaul of the economic and social fabric of society.

Laurent Laffitte
Technical Manager