Future of procurement - Are current changes in demand likely to represent a long-term shift in behaviour?
26 May 2020
Many people in countries impacted by Covid-19 have been forced to make changes during the crisis, such as wearing masks, stocking up on essentials, cancelling social and business gatherings, scrapping travel plans and working from home.
These habits have fuelled shifts in supply chains – and if they prove lasting shifts when restrictions ease, they could act as a brake on demand for some goods and increase demand for others.
It could lead to significant changes for procurement professionals focusing on resilience, rather than procurement solely for cost. One area likely to be considered is location and distance of suppliers from the market where goods are sold.
For example, in the garment industry, many key players are expecting new apparel-manufacturing clusters to emerge in nearshore markets, such as Eastern Europe and Central America.
Manufacturers are also rethinking where to buy and produce their goods and how to overcome the risks of relying on one source for components.
Additive manufacturing, such as the use of 3D printing, could increasingly be used for replacement parts, rather than holding 'just in case' inventory. This could also see a reduction in the carbon footprint of supply chains.
Supply chain analytics will need to evolve to be more flexible towards rapid shifts in consumer behaviour. Predictive models used in the food retail sector, for example, inhibited agility in supply chains during the onset of coronavirus because some told retailers consumers would continue with regular seasonal buying patterns even as stockpiling was taking hold.
There has also been a rapid shift towards homeworking, as well as to paperless, cashless, contactless and touchless operations within a matter of weeks, presenting a unique opportunity to ensure the benefits are retained after the crisis.
Many businesses have continued to operate with little disruption, even with 95% of staff working from home. CEOs of large multinationals have indicated an intention to review existing property requirements – some even publicly stating changes will be made.
These changes may have been happening before, but Covid-19 could be the vehicle that serves to expedite them.
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