What New Year's resolutions are procurement departments making for 2021?

Resolutions 2021 procurement departement
January 7th, 2021
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This year, procurement departments have really been put to the test by the health crisis. Between product shortages, border closures and even extensive lockdowns all over the world, the field of procurement has been right in the eye of the storm. Yet this has also given procurement departments the opportunity to demonstrate their strategic role within the company.

As we enter 2021, buyers still have big plans to tackle alongside the ongoing crisis. There are two New Year's resolutions in particular on the agenda:

Contributing to CSR

Corporate social responsibility is a key topic for procurement departments to explore in the new year. These days, due to legislative, ethical or even purely commercial reasons, companies no longer have any choice but to incorporate social and environmental concerns into their activities and their relationships with their stakeholders (customers, suppliers, employees, shareholders or even key players in the market). Each company chooses to make a commitment regarding the challenges of its sector: reducing greenhouse gas emissions, hiring the long-term unemployed, using sustainable resources etc.

Procurement has a major role to play in achieving these goals, so many procurement departments are focusing on the circular economy. This economic system, which is the opposite of a linear economy, aims to reduce the consumption and waste of resources and minimise environmental impact. It is based on seven fields of action, which include creating an environmentally friendly design, implementing a product-service system, consuming resources responsibly, increasing the length of use and recycling.

Relocation of supply chains is another topic that is back on the table. Procurement departments see this as a lever to help develop their ecosystem and market, but also to secure their supplies. Furthermore, 25% of French companies plan to move part of their supply chain — mostly to France, but also to Europe in general[1].

However, this relocation will only be possible if payment terms can be arranged, especially to support mid-market businesses and small- and medium-sized businesses. In addition, companies will need to be willing to pay the associated costs because, as you would expect, products manufactured locally and in good working conditions tend to be more expensive. Some players are happy to accept this compromise, as is the case with Valérie Précresse, President of the Regional Council of Île-de-France, who, when speaking at the most recent edition of the CNA's flagship event, Universités des Achats, quite rightly reminded attendees that "a mask bought in France is worth more because it helps keep our industry going". 

Improving collaboration with suppliers

During the health crisis, companies that have built strong, stable relationships with their suppliers have been able to respond quickly to the major changes that have occurred. For example, they have been able to quickly access the information needed to re-organise their activities or have succeeded in working with partners to bring the situation under control. Today, many such companies can confirm the truth behind the well-known saying, "hard times will always reveal true friends".

By contrast, companies whose relationships and interactions with their suppliers have been somewhat limited have become aware of the need to get to know them better. In many cases, these companies have found that they lack visibility or have sometimes felt like suppliers were treating their orders as low priority.

Consequently, 61% of buyers say that they will now put more effort into engaging and collaborating with the key players in their supply chain[2]. To do so successfully, they will need to map all of their suppliers (not just tier 1), establish regular discussions and develop a partnership that is beneficial to both sides. These conditions will enable procurement departments not only to improve their risk management, but also to create value — through co-innovation, for example.

It seems that if you really want to keep your New Year's resolutions, you have to limit yourself to just a few, but also make them realistic. Whether it's adhering to the Charter for responsible supplier relations (Charte Relations fournisseurs responsables), relocating certain supply chains, applying stricter environmental or social criteria to your tenders… it's up to you to decide!

[1] AgileBuyer and the French National Procurement Council (Conseil National des Achats — CNA). "Tendances et Priorités des Départements Achats 2020 suite au Covid-19" (Trends and priorities of procurement departments in 2020 following COVID-19).
[2] The Médiateur des entreprises (French business ombudsman), the Ministère de l'Economie et des Finances (French Ministry for the Economy and Finance), ADRA (Association des directeurs et responsables achats — Association of Purchasing Directors) and BuyYourWay. Current and future effects of COVID-19 on supply chains and procurement practices: feedback and lessons learnt for the future.