Procurement: The five crisis management strategies

Procurement ; Crisis management ; covid-19
April 23th, 2020
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Procurement departments are demonstrating their responsiveness to the economic and health crisis caused by COVID-19 on a daily basis. That is why it is interesting to share the experience gained and derive a crisis management methodology for procurement from it.

Procurement Leaders [1] has been working on this idea and suggests an approach with five strategies. For procurement departments, crisis management is based on:

Strategy no. 1: Establishing a specialist risk management team

For procurement departments to take responsive and relevant action, they need to have coherent and complete information to make decisions.

The specialist risk management team, working closely with other departments in the company, is focused mainly on three key aspects of business continuity:

  • Protecting employees, by providing equipment tailored to each operational context.
  • Maintaining strategic supplies for the regular production of the company's goods and services.
  • Creating new capacity to support the potential development of the organisation's economic model. 

Strategy no. 2: Focusing on supply chain risk

Keeping the supply chain functioning properly is a priority across the company.

Procurement departments are responsible for the mapping of supplier risks and, of course, for tracking them. This allows for:

  • Visibility across the scope of the value chain and identification of the weakest links.
  • In-depth knowledge of the contribution capabilities of strategic suppliers.
  • Monitoring of major risks by supply type.
  • Drafting alternative options in the event of partner failure.

Strategy no. 3: Finding new suppliers and networks

A crisis is historically a catalyst for development. Although establishing new ways to work together in a business did not begin with the pandemic, the emergency has strengthened the trend towards disruptive collaboration for procurement departments.

Devising new networks, new partnerships and a new distribution of value is essential in crisis management. It is in this vein, for example, that PSA, Valeo, Air Liquide and Schneider are pooling their engineers and skills to produce 10,000 ventilators before the end of the lockdown [2].    

Strategy no. 4: Anticipating and responding to customer behaviour

In times of crisis and in emergencies, traditional logistics channels, the usual outlets for your company's customers, are disrupted. To maintain their business activity, they need to modify their production and distribution system, and even their economic model.

In crisis management, the role of procurement departments is to give the business the means to support, and even better facilitate, this customer transformation.  

Strategy no. 5: Digitising and automating processes

In calmer times, digitalisation in procurement departments has proved itself as able to speed up processes and make them more reliable.

In a crisis, e-procurement is all the more effective:

  • Facilitating remote working with the Cloud.
  • Strengthening analytics capabilities with big data.
  • Scaling up operations with process automation.

In conclusion, the appropriate response from procurement departments in most organisations must inspire new approaches to risk management. The brutality and widespread nature of the global COVID-19 crisis are in some ways a test for how resilient procurement departments are.

Looking ahead is now a greater challenge than ever for procurement. For more on this, read the article by Julie Dang Tran, Managing Director of Manutan France: What does the future look like for procurement?


[1] Emergency risk management: Five strategies to mitigate the impact of COVID-19 — 24/03/20

[2] Capital — 31/03/20

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