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Procurement – at the heart of the crisis and the centre of the recovery

Practical Application Blockchain Procurement 983x440

Matthew Langley Public Sector, nhs, Procurement...

Public sector, especially NHS, procurement has been at the centre of the coronavirus crisis, perhaps for the first time bringing the general public an awareness of what procurement itself is all about. People started to understand that if PPE was not available then that was because of supply chains and purchasing decisions made over time and across international borders. All of a sudden, procurement became a matter of life and death, not just whether there was enough loo roll in Sainsbury’s.

When the UK economy was put into deep freeze at the end of March, the recruitment industry, like almost every other, fell off the proverbial cliff. The word ‘unprecedented’ was used a lot. Even grizzled managers who had been through the early 1990s recession or their younger counterparts who cut their teeth on the ‘Great (Ha!) Recession’ of 2008, which lasted for 18 months, have experienced nothing like it.

Across Cedar as a whole, our finance and transformation teams have, unsurprisingly, seen volumes of work diminish considerably, albeit with one or two hopeful straws in the wind more recently. However, our other main area of specialisation, procurement, has followed a different trajectory. We saw a spike in demand as businesses pivoted to put enhanced cost control and cashflow management in place and looked to Cedar’s procurement team to hire the leading buyers, procurement and cost control professionals needed to drive these changes.

This business came from a wide range of sectors, from FMCG, pharmaceuticals, cloud-based tech firms, high street retailers and even hospitality groups planning for the return to full operational capacity. However, the question everyone wants answered is, what happens next…?

Well, one thing that is clearly important is to increase business confidence. Of course, the politicians have a key role here, but business can play its part. With the caveat that all this is dependent on the progress of the virus, it was encouraging to see the FT’s fifth round of reader research (end June ’20) shows “a picture of cautious but growing optimism (and) the number optimistic about their company’s performance in the short term has increased from 26% to 38%” (while) “70% of all C-Suites now say they are confident their company will successfully navigate the crisis. This compared to only 55% in the beginning of April.” Backing this up, the Evening Standard reports that Andy Haldane, the chief economist of the Bank of England, while not shying away from the reality that there is, “a risk of soaring unemployment when the Government support measures end, which could impact the path of recovery,” believes that, “the UK economy is on course for a V-shaped recovery (and that) the recovery in the UK and globally had come “sooner and faster” than expected.”

The ways in which we work and, more specifically, how we sell, communicate and deliver goods and services are evolving rapidly and will continue to do so. More automation/AI and a slew of technological innovation will transform industries, including recruitment. As far as procurement is concerned, at the onset of lockdown, savvy companies looked at the areas of supply management risk. With the likelihood of thousands of firms going bust in the next six months, the need to source new suppliers and ensure they meet all the required standards of probity and business quality is even more vital than usual. Expect more use of AI cost-modelling and procurement analytics to become the norm, with the latter’s ability to dig deep into contract portfolios to identify and weed out any non-performers being especially important. Resilience will be the watchword.

At a time when many are asking for debt forgiveness and payment holidays, procurement will, I am sure, be looking to re-open contracts. Everyone will be looking to negotiate their costs down, while trying at the same time as to increase their prices to offset the economic damage already sustained. As a result, we expect that the demand for the very best procurement professionals, at every level, will surge as companies realise just how important they are going to be to their future success in the “new normal.” As noted above, we’ve already seen this demand growing, and we expect it to steadily climb over the next year.

Procurement must also be mindful that, even as the world economy strives to climb out of the depression, consumer pressures for greater sustainability will not go away. Sustainability and environmental responsibility will be key here, as will regulatory compliance to meet tighter government regulations and enhanced public expectations.

As with every business specialism, the rush to digital will bring challenges, one of the biggest of which will be cyber-security. The switched-on Procurement Director will make best-friends of the CIO and work with IT and the wider business toward digital transformation, but investment in AI-based data protection or blockchain to counter cybersecurity threats must not be neglected.

On the jobs-front, the growing optimism noted above from the FT is reflected in LinkedIn (who obviously have skin in this particular game) claiming that job views (on their platform) have returned to pre-crisis levels. The other, generalist job-boards are also being as upbeat as they can (with varying degrees of enthusiasm), but it’s when you go to the specialists that you start to see the number of procurement jobs available. Supply Chain Online has, at the time of writing, 1,419 advertised positions, including 182 in procurement, 98 in supply chain and 182 contracts managers. At the top end of the market, the FT’s exec-appts site has dozens of big-bucks jobs, including one with the World Bank. We expect these numbers to grow. The opportunities are there; it’s how to respond and make the connections. And that, of course, is where we come in….