The health and economic crisis triggered by Covid-19 has turned purchasing in business on its head. After being at the eye of the storm, it sees its priorities evolving over the short and medium term. To clarify the situation, business leaders met to discuss the positioning and responsibilities of the procurement department within their organisation, as it faces the challenges of tomorrow.
How Covid-19 Is Reshuffling the Cards for Corporate Purchasing Departments
Laurent Tardif, Chairman and CEO of Prysmian Group South Europe, opens the debate by recalling the impact of the health crisis on procurement: “The shock that we have gone through has further enhanced the central role of procurement, which has obviously had an impact in all our Covid meetings and committees". At the Italian producer of energy and telecommunications cables, the purchasing department had a threefold mission: to guarantee the stocks of essential personal protective equipment for employees, to ensure that production continued to operate smoothly, and to identify the risks associated with supplies.
We have all witnessed it: during the pandemic, corporate purchasing proved its worth. Today, it hopes to capitalise on its success to firmly establish its strategic position. After the emergency of the first few months of the crisis, purchasing departments are still mobilised, with two priorities on the agenda:
Even organisations that have been able to pull through and continue their business activities in the midst of the pandemic must now prepare for a phase of instability. To ensure the survival of their business, purchasing departments will undoubtedly have to reduce their costs. With the difference that, today, they will use different methods to achieve their ends. It is no longer a question of pressuring suppliers to lower price, but rather of working hand in hand with them to improve productivity, in a virtuous circle for all the stakeholders. This involves, for example, optimising and digitising processes, improving efficiency, reducing waste, receiving products "just in time", etc.
Securing Supply Chains
Because our supply chains are all interconnected, Covid-19 has highlighted new risks. This is why it has become essential to accelerate and improve risk management programs, from the start of the supplier referral process and throughout their lifecycle. Jean-Philippe Riehl, Director of Risk Control and Internal Audit Manager at Spie, the independent European leader in energy and communications services, drew attention to a worrying figure: 60% of cyberattacks now target the supply chain, underlining how essential it is to ensure its robustness.
Economic Performance vs CSR?
As a topical subject for several years, Corporate Social Responsibility had to be addressed by managers. At first glance, corporate purchasing would seem to be faced with a conflict of interest between ensuring a sound economic performance and meeting their social and environmental responsibilities.
Fabrice Bonnifet, President of C3D (College of Directors of Sustainable Development) and Director of Sustainable Development & Quality, Safety, and Environment for the Bouygues group, has called for a complete rethinking of current economic models. He gives the example of his own sector, the construction industry, which is the largest producer of waste in Europe and the largest consumer of non-renewable raw materials in the world, but which is still failing to recycle materials to any degree.
He is also convinced that purchasing will play a key role in the transformation of this model, in contrast to production, which is ultimately a weak lever for reducing the social and environmental footprint of companies. Among the many solutions available to buyers are: the integration of responsible and sustainable criteria in sourcing, but also, and above all, all the principles of the circular economy and sustainable consumption: the functional service economy, extending the working life of products, recycling, etc.
During the health crisis, Europe recorded a 7% reduction in its greenhouse gas emissions. To achieve the objectives of the Paris Agreement on the climate and to limit the rise in global temperature to 1.5 degrees Celsius, the United Nations estimate that "global greenhouse gas emissions must be reduced by 7.6% year on year over the next decade, if the world wants to repair the damage done”. So, we should aim at achieving the same results as those obtained during this year of global crisis, when economic and industrial activity was put on hold. This reminds us that there is still a long way to go and that all those involved, including companies, must pull in the same direction.
To conclude, buyers must learn how to purchase differently and integrate new data to take part in the transformation of companies. This requires the use of effective tools and strong convictions but, above all, it gives the profession a sense of purpose.
To study this topic in greater depth, download our white paper to learn how to integrate CSR into the heart of your company's purchasing policy.
 Source: Accenture