Page 70 - Retail World Tob - May 2020

PROCUREMENT BRAVE NEW PROCUREMENT WORLD A view from beyond the COVID-19 disruption, looking back at the crucial role of the right procurement strategy in a business’s survival. JBy Pollen Procurement Director Aleksander Strasek. oin me on a journey. Let’s step into a time machine and leave this crisis behind. We venture outside at some point in the (hopefully not so distant) future. Curfews are lifted, borders are open, supply chains are being reconnected and business and individuals are in the market to buy and sell goods and services again. The world seems to be ‘normal’. Only it isn’t. While there were winners, the disruption to the retail sector was far too severe. Demand for discretionary goods and services evaporated overnight, immediately impacting the top line, while the fixed cost base remained as is, locked in through contracts. In such an environment, only those survived that didn’t hesitate to adapt their business model and weren’t too precious. The most successful strategies centred around the convergence of the analogue and digital channels to create a customer-centric experience that was truly seamless from beginning to end. Procurement’s role was crucial for the successful transition. The initial focus was immediately to avoid all non-essential spend altogether, and being creative when negotiating existing contracts with suppliers, be it with landlords, insurance companies, telcos, logistics companies or others. The currency and accuracy of the underlying cost helped procurement identify the key levers to pull and to make fact-based decisions in a timely manner. With cost leakage under control, the attention was turned to short-term sourcing needs. In most cases this meant to safeguard the wellbeing of the workforce and supply them with personal protective equipment such as masks and hand sanitisers. The procurement handbook was thrown out the window. The only critical KPI was how quickly the goods could be delivered to employees. The market behaved irrationally for a little while and dramatically affected unit prices and transport cost. Volatility was the new norm, agility the way to deal with it. This required both procurement and suppliers to remain incredibly flexible and react quickly to changes across the entire supply chain. During this time, procurement organisations that had forged longer- term relationships with their key suppliers were better equipped to cope with the uncertainty and sustain the supply of critical goods and services. Those relationships were nurtured over the years and built on a mutual understanding of each other’s business, and consequently, trust. At the same time, procurement needed to look inside to adapt to the velocity of change. Relieved from the daily commute, employees had the headspace finally to complete online training courses and expand their capabilities. Putting those into practice to optimise internal processes with clear roles and responsibilities drove efficiency gains previously not thought achievable. In some cases, this newly discovered creativity was even used to drive innovation from procurement back into the business, by coming up with new ideas for products or packaging solutions. So, where does all this leave us, now we’re back from our time travel? What have we learnt? The new procurement world will be distinctively different from the old one. The speed of change will require an agile response to the challenges ahead. Start yesterday, secure your supplies, go hard on cost-outs, and don’t forget to fix the basics. About Aleksander Strasek Originally from Germany, Aleks has an exceptional track record with more than 15 years’ experience in strategy and management consulting. He is a leading specialist in finance and procurement, successfully delivering multimillion- dollar transformation engagements for a number of corporations across Australia, Europe, and APAC. Aleks joined Pollen earlier this year as a Director to focus on developing Pollen’s procurement service offering. About Pollen Consulting Group With a full set of credentials to service the COO, Pollen are the go-to people for supply-chain transformations in the FMCG sector. Specialising in supply chain efficiency and manufacturing excellence, Pollen are experts in problem solving with an ethos to ‘find the best possible solutions to your greatest challenge.’ Visit pollenconsultinggroup.com 68 RETAIL WORLD MAY, 2020