Procurement COVID-19 response

The spread of coronavirus, COVID-19 has being felt globally across operations in ways that are difficult to model and assess. The affected regions are at the heart of many global supply chains. Hard information is lacking; concerns are mounting over depleting (or idling) stock; and companies fear they won't meet contractual obligations on time.

Understanding how global manufacturers are managing through disruptions to their supply chains will help all businesses structure their own responses. Impacts in many companies across many industries seem inevitable. In the near term, the cost of supplies from China may increase, stemming from overtime and expedited freight costs, as well as from paying premiums to buy up supply and hold capacity. Companies are also working through alternative sourcing strategies. It will be critical to identify alternative supply scenarios and evaluate what these mean for operations for example, as cases of viral transmission emerge in different territories.

Wider macro risks affect the entire business world and the extended supply chain. Managing procurement risks and cost need to be the priority to adjust to the new economic reality and coordinate investments reducing the complexity of supply chains while at the same time improve supplier transparency. COVID-19 has disrupted the business world and challenged supply chain reliability. Sourcing and procurement functions are facing demand imbalances leading to inventory challenges, uncertain reliability of delivery as well high risk of risk to supplier in single-source supplier situations. Non-transparent supply chains and a new reality require flexibility and additional focus on sourcing and procurement functions along with risk management to sustain operations and thrive as a successful business in the future.

To build such capabilities, to have the ability to react flexibly to the challenges in the business environment as well as meet the needs of the organisation, Deloitte has identified key issues along the crisis response framework Respond, Recover and Thrive."First, to ensure security of supply from existing suppliers, give priority to achieving visibility in the immediate and extended supply network. Second, stay close to your customers to identify changing demand patterns. Third, rethink your ways of working and revise the operating model to make the procurement function a proactive business partner. Fourth, to build a future-proof procurement function creating resilience by investing in risk management capabilities and digital procurement tools".

With Category Management in mind, set out in detailDeloitte's four main responses to enhance Purchasing as a strategic function after Covid 19. Include in your answer what impact the changes you feel will have toenhancing Competitive Advantage.