Last week, scoutbee’s Enno Lückel and Professor Ronald Bogaschewsky, Chair of Industrial Management at University of Wuerzburg, took part in iVentiv´s “Virtual Knowledge Exchange” for European Chief Procurement Officers. Below, we take a look at some of the findings…
With markets seeing supply-demand volatility, a verified data driven view of optimal supply options at category level is now vital. COVID-19 has hastened the imperative to raise all forms of resilience with better optionality and multi-local-sourcing.
For Professor Bogaschewsky, the Covid crisis came very suddenly, but to say it was a big surprise would be to ignore that many supply chains suffer from weaknesses. For decades, the paradigm has often been that cost efficiency came before stability or even resilience when it comes to industry competition.
“We have all contributed to this happening. Now we see that we have shortages of many raw materials, of pharmaceutical pre-products or computer chips, and insane prices for transporting containers from Asia. I was not surprised that this would happen. The supply chains we have built over the last decades are extremely fragile. It’s always about fragility versus stability, and that means cost efficiency versus more resilience”, Bogaschewsky says.
Global supply market transparency is the key strategic factor
The Professor advocates re-evaluating and questioning our global value systems to become more resilient, yet also cost-efficient. From his perspective, one needs to always question: do I still have the best sources around the world, and not only in terms of cost, but also in terms of innovation, flexibility, quality and resilience?
Global supply market transparency is the key strategic factor that helps companies to gain competitive advantage. Acting strategically has to be a core competency of the company. The professor demands a clear picture of the whole procurement market and decisions on the basis of a multi-dimensional decision matrix: “We have the cost factors, but we also have the stability, quality and innovation factors. That is more sustainable than putting all your eggs in one basket. The paradigm of having a small and stable supply base is fine in a stable environment. But the environment is changing.”
“There are millions of suppliers out there, technological innovations, companies that bring new products and services to the market. Why wait until your competitor uses these suppliers? You should be the first and always know what’s going on!”
For Professor Bogaschewsky, success lies with “market intelligence” as a broader approach, not just event-based or demand-based scouting. It’s about having transparency, competitive information and intelligence brought into the company, “Adding this intelligence works almost like a ‘magic broom’ for purchasing. All of a sudden, you can do things you never dreamed of. Procurement should do this as a systematic approach, not only problem-oriented, to develop purchasing for the future. It should become a key competency,” he advises.
Today, with digital tools we can combine both: AI driven powerful software for supplier scouting can help procurement to tackle real strategic issues, have a structured process to offer their internal organization and put procurement back in the driving seat. Procurement should therefore be positioned as the ‘knowledge partner’ in companies, for example showing how product design-engineering-production challenges can be solved by procurement tech uncovering the answers. Supplier insights can then unlock value across the whole organization and help ensure that procurement remains strategically relevant.
Competition in a supply network is the best fertilizer for achieving excellence
Too often, companies can take a crisis management approach rather than a proactive approach that would deliver them long-term advantages, i.e. staying ahead of the competition. There is much evidence to suggest that competition across a supply network is the best fertilizer for achieving excellence in all the key areas of procurement value – price, market, innovation, technology, logistical – all propelled by the competition to win those purchases.
scoutbee works with multi national companies across a wide range of sectors to enhance the transparency and resilience of their supply chains. To discuss your needs, do reach out to firstname.lastname@example.org