Supply Chain Chaos: Is Sustainable Procurement a Solution?
Over the last two years, the flaws in our global supply chain have become increasingly and painfully obvious. Vulnerabilities in the complicated web of imports and exports have become glaring in the wake of extreme climatic events, political instability, and trade wars. We’ve witnessed huge shipping delays as a result of in-shoring and insourcing, relying on suppliers located in climatically or COVID-19 affected regions, labour shortages, and operational inefficiencies at ports worldwide.
Amidst this chaos, it could just be the right time for leaders in procurement and supply chain to act cohesively. What we’re seeing is an opportunity to reimagine sourcing and supply ecosystems to make them less susceptible to disruptions. The convergence between supply chain and procurement functions is an essential part of solving the global crisis facing our world today. Tighter integration to more sustainable procurement efforts helps support supply chain functions when disruptions happen. It can mitigate overall risk by allowing enterprises to gain a better understanding of potential disruptions in advance, and ensure that procurement practices are aligned with the supply chains’ specific requirements.
It’s important to recognize the fundamental differences between procurement and supply chain management. Procurement emphasizes the input process, the purchasing and acquiring of the goods and services needed to run your business operations. Supply chain management focuses on output and delivery, encompassing how the supplies from procurement processes are transformed into finished products and delivered to end-users.
Despite their key differences, supply chain management and procurement both offer massive opportunities for corporations to embed sustainability and inclusion into their business models – a transformation that is a priority at corporate executive tables. Supply chains have finally got C-suite attention, and are being recognized as a critical driver for growth. The pandemic has forced companies to shift their focus towards creative and innovative solutions, restructuring their business models to ensure maximal resiliency, continuity, and flexibility.
In order for companies to adapt properly to changing signals in demand, they need to collaborate with their suppliers on demand planning and forecasting, capacity planning, orders, and quality management. We believe that folks really are beginning to strategically leverage procurement and as a tool to mitigate supply chain disruptions, identifying and implementing alternative sourcing strategies for essential products and critical services.