The procurement boss at animal feed company Nutreco has described how a “three-week decision was taken in three hours” following Russia’s invasion of Ukraine.
Paul Bestford, CPO at Nutreco, said the sourcing of “several thousand tonnes” of wheat and corn from Ukraine had to be switched once war broke out.
Speaking at CIPS Procurement Futures in London, Bestford said the key lesson from the disruption was “the most adaptable survive”, making speed of decision-making and tolerance of risk paramount.
“We can’t be sure about what’s going to go wrong, but we can predict how we we will react in that situation,” he said.
He said this included considering what decisions might need to be taken following a crisis, who makes them, and “preparing the how”.
Bestford said Nutreco had revenues of €9bn and a procurement spend of €8bn. “Procurement at Nutreco is pretty core,” he said. “We buy and sell and don’t add much more in the value chain.”
He said his team moved 10m tonnes of raw materials across the globe.
“A lot of commodities we buy – wheat, corn – comes from Ukraine. Our supply chain was thrown into chaos pretty immediately.”
Bestford said he had previously identified Ukraine as a potential risk, “so we did a bit of prep, but not enough”.
“If we had fully prepared for Russia invading Ukraine and Russia had not, that would have been catastrophic for our business.”
He said such preparations would have required “so much inventory we would not have been able to compete”.
Bestford said procurement professionals with a high tolerance of risk would thrive in uncertain environments. “They are people who prioritise speed over process and they are probably people with a breadth of experience that allows them to join the dots and anticipate what happens next,” he said.
But he added: “When you have absolute stability and everyone wants to be as lean as possible, then having risk takers is probably not the best.”
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