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How must we adapt our offerings to adjust procurement changes in the post pandemic era?

How must we adapt our offerings to adjust procurement changes in the post pandemic era?

Supply chains on a global scale could not have been more disrupted by the current health crisis. As a consequence, the nature of procurement departments’ decisions will change. 

Procurement departments will focus on building resilience over cost-saving. In doing so, they will diversify their supplier’s portfolio by incorporating smaller/local suppliers. This will increase supply availability and reduce uncertainty. 

Moreover, companies will work on building a collaborative relationship with their suppliers. When drafting contracts they will be more understanding. For instance, some changes that are likely to occur: 

  • Added price variation clauses over fixed price of supply. 
  • Delivery commitments will allow more flexibility in case of external conditions. 
  • Minimum purchase commitments will also change given the reduced demand many sectors have experienced. 
  • Shooter-term contracts. 
  • Termination clauses will be more flexible contemplating different escenarios. 

Stock management will experience some change as well. For instance, minimum stock levels for low-cost critical items will likely increase. 

Ultimately, companies will likely reconsider their decisions to outsource since, in front of this disruption caused by this health crisis, producing in-house might have become more appealing. 

Overall, decisions will be digitally-driven. Meaning that companies will base all their decisions of high quality data. Proactive adaptation will not only help companies counter some of the effects of this crisis but also set themselves for the future. 

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