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…
For so many around the world, the experience of the coronavirus has been like waking up from a dream, only to realise that you are still in it. You knew the world around you, or so you thought. But suddenly, frighteningly, everything you knew started to become unstitched. The four walls of your home became rather stifling but the blue sky outside seemed more radiant than ever. You savoured your favourite pasta. You learnt to use just one sheet of toilet paper. You wrote a letter to a loved one. You realised just how precious a hug can be.
The coronavirus pandemic, undoubtedly, has been about the big things. Lives lost, businesses broken and economies shattered. But, for many of us, it has also been about the total inversion of the small things. Take, for example, ‘essential workers’, the people that – let us be honest – before, we rarely thought about. This crisis has highlighted just how important supermarket shelf stackers, cleaners and parcel delivery people are to our daily lives. These jobs are not ones that we aspired to, nor ones most appreciated. Now though, we have had to take a step back from our life of never-ending convenience and expectation to understand that these people are the ones that prop up everything, while we continue unwittingly. The delicate eco-system that supports each and every one of us has been exposed, and there is no going back – not now, not ever.
Just as the eco-system of life has been laid bare, so too has the fragility of our supply chains and the logistics monolith that supports it. ‘Before’, a term that cannot be so casually used anymore, the proverbial ball was largely in our court. Our suppliers and contracts, hard-won after tough negotiations, became a feature, ever compliant, on a spreadsheet. We kept demanding, they kept producing – nothing to see here. Until, of course, there was everything to see and we were scrambling to figure out if not you, then who? The scramble laid bare the fact that our suppliers represented a lot more in real life than a piece of data on a computer.
Yet still, for a while, it was a ‘China problem’. They will sort it out, we told ourselves, after all, SARS! They know what they are doing. We failed to own the problem as our own, we barely contemplated the potential for a global logistics breakdown. Force majeure was there to protect our interests, not the fact that our cash-strapped suppliers might be forced to shut – and may not have the ability to re-open. Overnight it became a supplier market again. They knew we needed them, and badly. Their faults became our headaches – but what did we really expect?
That supplier? That logistics trail? That global, intricately woven, incredibly complex system that supported us? That is our eco-system. Those suppliers, we have realised, they are so much more than a number on a spreadsheet; they are a livelihood – ours. They are complex, they are human, our relationship is not a one-way street. Understanding them, analysing them, getting real-time data and, above all, building a relationship, is the only way to keep them – and our precious eco-system – alive.
‘Before’ we squeezed them on price, because we could. After all, that is our job, right? Now? Those dollars do not count for much, if we cannot keep manufacturing. ‘Before’ we preferenced short-term gains because it just looked better. Now, we realise how little those gains counted for when we have had to throw our business continuity plans out the window. ‘Before’ we could afford to put processes before people, we could afford to be blind rule-followers. We could afford to do what we always did because that is just the way it was always done.
But now? We know. If the pandemic has done anything, it has forced us to hold ourselves to a higher moral standard. Our suppliers are our partners, we should treat them with the respect that their title deserves. Sure, monitoring technology is needed, some even say that it could have predicted the current interruption – and we could have planned for it. But beyond the data, the artificial intelligence and all the tools we will soon have in our toolbelt, what we need most is human relationships. Respect. Good business practices. Efficiency, not processes. Value, not dollars.
Right now, we are living a nightmare. But when we wake up, we will still be in a dream. Let that be one, procurement, where we forge new relationships, break new boundaries and focus on what really matters – people. Let us look to technology not to replace human interaction but to enable us to better collaborate with our suppliers, and to do so with more of them (not just the few that we have determined to be most strategic).