Monitoring spending in real time – top priority for supply chain

Logistics and Supply Chain News

The change brought to supply chains around the globe in 2020 will require companies to shift many aspects of their operations. According to John Piatek, GEP’s vice president, consulting, consumer goods and retail, and chairman of the firm’s Thought Leadership Council, organisations will have to rethink the whole ecosystem of partners and how decisions are made more rapidly. If 2020 was about survival, 2021 will be about investing in change.

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‘I think most businesses realise they are entering 2021 as a smaller or changed business,’ begins John Piatek. For him creating a more resilient supply chain will be one of the key success factors in the future. A good example is retail which had to quickly readjust when its old methods of working were unable to satisfy the changed environment.

Large stores emptied quickly both from goods and customers as people panicked buy or switched to online ordering. Piatek argues that companies are forced to change much faster than they would naturally be comfortable to do.

Sustainable spending
What is the single most important thing that needs to be achieved? For Piatek it is the ability to monitor spending in real time. ‘It has become obvious that it is very hard to stop spending even when income stops,’ he says. If before finance was the leading actor, procurement would have to step up and provide the data that could lead to better understanding of where each penny goes.

Such dynamic strategy would allow more flexibility and easy adaptation to what is happening with suppliers and lockdowns. Piatek admits that this methodology is not easy but is more sustainable than just applying cuts whenever there is a crisis.

Positive attitude
During 2020 the economy went into survival mode but Piatek expects 2021 to bring new opportunities to those who are proactive and look for how they can create a competitive advantage despite the crisis. Problems are mounting up, however. Having spent nearly a year indoors many organisations struggle to have basic visibility over their supply chains. With the rise of social movements like Black Lives Matter the choices firms make will have a huge impact on their trading abilities. If before it was easier, cheaper and faster to choose a remote location with limited visibility, Piatek believes social responsibility will become a driving factor during decision making.

On the technology side, Piatek argues there are only a few tools that could provide the high-end visibility that would allow for vendors to enable good and detailed collaboration between suppliers.

‘Firms desperately need this,’ he reaffirms and continues: ‘it is very difficult for those who have old legacy ERP systems.’ Piatek acknowledges that one year is not enough for large procurement and supply chain organisations to transform. It would take not only time but investments and resources that at the moment might be missing for the majority of companies.

Friendly collaboration
‘Organisations from specific industries have a historic image of being aggressive,’ says Piatek, ‘but they would need to collaborate with their partners now.’ To drive the path to recovery and stable improvement companies would need to adopt a more

collaborative approach that should be driven from the CEO. ‘It takes real courage to drive this agenda,’ Piatek adds. The time to plan and rely on government support is running out and companies would need to build the ability to deal with uncertainties better on their own.

Diversity is becoming a metric that investors are considering and are ready to hold senior executives accountable for when companies breach universal moral standards. Diversity and inclusion were topics that used to stay away from the board room and social movements barely had an impact on business activities. ‘Procurement and supply chain can really help with this because they control so much of the spending,’ Piatek says. ‘In GEP we believe that diversity and inclusion need to be hardwired in procurement payment processes and technologies.’ The company argues that though implementing such metrics organisations could ensure a continuous sustainability. If companies fail to invest, they might find themselves subject to investigations and even in the centre of an activist movement.

Going green
Last year people were understandably slower when it came to investing in green initiatives as they had to focus on how to keep the business running. ‘Sustainability in 2021 is finally a board level topic,’ Piatek argues. ‘Expectations are higher than ever that individual businesses need to be an important actor that contributed to the overall sustainability objective.’ If before green initiatives were solemnly governmental matter now the society all agrees that leading firms need to be leading the change. ✷

Global effect of Brexit
‘Brexit has diminished the ability of large manufacturers to plan for long term investments,’ Piatek says. The changes brought by the UK’s exit of the EU are forcing businesses to think short term and be extremely agile. The expectations are that as Brexit uncertainty clears and companies get familiar with the new setting trade would resume normally.

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