Scrutiny is higher, and a lack of preparedness is the perception, said the report.
Scrutiny is higher, and a lack of preparedness is the perception, said the report.

Does procurement have a reputation for being 'disorganised'?

2 October 2020

More than a third of CPOs believe the function is perceived as “disorganised and unprepared” following the Covid pandemic, according to a survey.

The survey, in a report by ProcureConEU and research firm WBR Insights, found that when CPOs were asked how the pandemic had affected their departments “40% said their procurement teams are under more scrutiny from senior management, and 37% said procurement now has a reputation of being disorganised and unprepared”.

Responding to the same question, 8% said they believed procurement was viewed as “more mission-critical” while 15% thought there had been “no meaningful change to how procurement is perceived”.

Rowan Lemley, head of product marketing at the European procurement payment firm OpusCapita, said the responses reflected a “new self-awareness which procurement teams are now dealing with”.

He said: “Scrutiny is higher, a lack of preparedness is the perception, and there begins to be a growing sense of the importance of the procurement mission.” 

The survey of 100 CPOs from across Europe was conducted by WBR Insights between April and June to assess challenges facing the function during the crisis.

The survey was part of a report covering a wide range of procurement impacts, including strategy, contracting, social responsibilty, and sourcing in a post-pandemic environment, with expert commentary from procurement software firms Icertis, OpusCapita, and the ProcureCon community.

The report found firms have been pressured into a “survival mode”, resulting in 74% removing, reducing or postponing corporate social responsibility initiatives.

Lemley said: “We might like to think that a crisis would push us towards more responsible, sustainable procurement but the reality may be that organisations are in survival mode, and putting out the fire is more important than knowing where the water came from that is dousing the flames.” 

Almost all procurement professionals surveyed (93%) said they had excellent or good visibility of their supply chains pre-Covid. However, after the crisis, only 44% of professionals felt they had sufficient transparency, with over half (56%) saying they didn’t have enough information. 

Recent evidence suggests lack of visibility in the supply chain can lead to supplier vulnerabilities and increased cyber security risk.

While 58% of respondents said contract management systems did not help tackle Covid challenges, 42% disagreed – highlighting how digital solutions helped plan and maintain contracts, said the report.

When asked about potential impacts from Covid in the next three months, Florian Eineder, global head of procurement at German-based brewery Erdinger, said he expected to see a “market cleansing”. 

“All the companies that have been on the edge financially before the pandemic will be facing significant problems. Some suppliers have already had to file for bankruptcy. In some cases, we will be facing monopolies, and we’ll need to start looking cross-regionally to different markets.”

Eineder said in the label market there was only one competitor left in Germany. “Now we need to re-evaluate our supply base and look abroad to decide where we are going to source in the future,” he said.

“In five years’ time, I think we will be facing higher prices in many cases, because we will have fewer competitors, and they may still be recovering from problems that they’re facing now.”

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