Quality and value, and not cost savings, have remained the two biggest factors in key procurement decisions during the pandemic.
The Facing the Future survey, conducted by multi-service procurement consultancy BCR Associates, canvassed the opinion of South West businesses from a variety of sectors, including Manufacturing, Education, Hospitality, Retail, Wholesale and Care.
Ranging in size, from less than 10 employees to more than 200, they provide a snapshot of how Covid-19 has impacted the supply chain.
In the survey, participants were asked to share their procurement challenges, priorities and predictions. Steve Bolt, director for BCR, comments: “None of the businesses chose ‘the cheapest’, as a reason for supplier selection, and when asked to predict the key trends for 2021, cost over quality scored just 13%.”
“It’s good to see that quality and value continue to drive procurement decisions, despite a tough 2020 and the ongoing economic uncertainty.”
Bolt explains: “The pandemic may have refocused businesses’ priorities, when it comes to choosing a supplier, and this could be because some have felt let down by certain suppliers.”
Regarding the impact of Covid on the supply chain, the survey uncovers the issues businesses faced, as suppliers transitioned to remote working.
53% said reliability of service had marginally declined, while 51% noted a marginal decline in communication with suppliers. One respondent commented “the main issue has been, and continues to be, just getting in touch with the right person.”
Bolt says that even BCR, with their direct line into suppliers, noticed some disruption. Promisingly, however, survey respondents found only a marginal decline in service, with one business leader commenting “people have demonstrated human values: patience, flexibility and a willingness to explore creative solutions to problems.”
When asked about the priorities for supplier selection, the top answers were as follows:
- Value for money
- Quality of service/ products
- Good reputation in the marketplace
Bolt says: “Sustainability also scores highly, with a third of businesses claiming it is a key priority, but right now a lot of supply chain decisions are still driven by value, quality and reputation, with sustainability considerations underpinning these ‘cornerstones’ of a great procurement strategy.”
Other key findings from the survey include:
- 62% of businesses claimed their biggest challenge is a lack of resources and knowledge within their organisation, when it comes to working with suppliers.
- IT and Technology score jointly, with Business Supplies, as the most difficult areas of procurement to manage.
- 25% of businesses say they outsource energy procurement to a specialist/ consultant.
- 33% say flexible and fair contacts is a key consideration
- When asked about their fears for the future, 42% of businesses noted that legislation changes, as a result of Brexit, are cause for concern, while 31% site international trade disruption.
- Digital transformation came out on top, with 71% of businesses, as a key trend for 2021.
Looking to the future, Bolt comments: “When asked about the key trends for 2021, given the economic uncertainty we are currently facing, I’m surprised that just 40% of businesses chose volatility in the market.”
“At BCR, we predict this will continue to be a big challenge, with some suppliers failing and certain sectors battling the impact of the pandemic.
“This is why we encourage businesses to plan ahead, set a procurement strategy and do their due diligence to check that a supplier is well capitalised.
Bolt continues: “There have been 15 corporate failures in the last 18 months, in the energy market alone, and so it is important to ensure the long term viability of a supply partnership.”