SAP: Procurement’s role in navigating global disruptions

“Supply chain disruptions aren’t a new challenge, but they’ve been dramatically compounded and lasting due to ongoing shortages and delays caused by the pandemic,” said Etosha Thurman, Chief Marketing and Solutions Officer, Intelligent Spend and Business Network, SAP.

In a study conducted by SAP and Regina Corso Consulting, the two found that among US supply chain professionals 90% believe that procurement has gained greater responsibilities when it comes to addressing supply chain and sustainability challenges. 49% also reported that shortages and disruptions are keeping them up at night. 

“To navigate these unpredictable circumstances, supply chain leaders must strategically leverage procurement to effectively manage supplier relationships, mitigate customer frustrations, control costs and ensure business resiliency,” said Thurman.

In addition to shortages and disruptions, supply chain professionals are also concerned about sustainability (28%), reducing costs/saving money (27%), consumer feedback (21%), digital transformation (20%), and regulatory (18%).

While only 28% are concerned about sustainability, 91% of supply chain professionals have specific sustainability goals or objectives, with 95% stating procurement plays a significant role in achieving them. 

“If post-pandemic supply chains are to be resilient, they must be sustainable. It’s not enough to just track and extoll green virtues, sustainability must become part of the way that supply chains are run,” said Simon Ellis, Program VP, IDC.

“On the other end, the growth of e-commerce and consumer expectations for ‘next day’ delivery often runs counter to sustainable fulfilment and carbon footprint. There will have to be a rebalancing or rationalisation about the way that people consume: ‘do I really need the product the next day?’” 

Procurement’s elevated position to navigate supply chain disruptions

“Between the global pandemic, labour and supply shortages and increasing consumer demands for sustainability, the supply chain professionals surveyed agree that procurement has taken on a more strategic role to help mitigate key challenges,” said SAP.

50% of professionals said that procurement is helping alleviate supply chain challenges by improving transparency; 48% report that it helps develop better supplier relationships; and 45% noted that it helps to diversify suppliers increasing resiliency. 

In addition, 33% identified that procurement helped to adapt payment terms, improving trading partner liquidity; and 21% stated that it is helping to reskill talent to address high-level business priorities.

“The study shows that procurement is helping businesses achieve visibility, transparency and accountability with their suppliers, especially when it comes to potential disruptions, enabling them to pivot quickly to new suppliers and ensure continuity,” said SAP.

How consumers can help ease supply chain shortages

When it comes to supply chain shortages, those surveyed by SAP and Regina Corso Consulting highlighted the role that consumers need to play when it comes to easing supply chain disruptions.

54% said that consumers should allow more time for fulfilment; 46% noted that consumers should buy more local goods and order earlier; 33% identified that consumers should be willing to pay more to account for higher supply chain costs; and 32% stated that consumers should have more empathy and understanding for the delays.